Avianca Reports Fourth Quarter Adjusted Operating Profit of $98.5M, Full Year 2019 Profit of $181M
Avianca reported on Friday a fourth quarter adjusted operating profit of 98.5 million and a full year adjusted operating profit of $181 million. The airline achieved an operating margin of 8.4 percent for the fourth quarter, a 23 basis-point improvement year-over-year.
On Friday, Avianca announced the completion of their financial re-profiling as well as fourth quarter and full year financial results. During the fourth quarter, the carrier renegotiated $2.6 billion in debt and lease obligations and completed $375 million in convertible loan funding. As a result, KPMG removed their “Going Concern” qualification for Avianca Holdings. In the fourth quarter, Avianca also reduced their adjusted operating costs by 9.7% and unit cost-excluding fuel by 2.8%, while cancelling 27 unprofitable routes. The airline carried 7.4 million passengers in Q4 and a total of 30.5 million for the full year. In Friday’s announcement, Avianca Holdings’ Executive President and CEO, Anko van der Werff said,
“The last couple of months have been very demanding and challenging, but they allowed us to confirm that a change in the business strategy was necessary. Our partners, suppliers and customers who now trust in our company, enabled us to successfully close this year and reassure Avianca’s future. The results we present today are in line with our expectations and allow us to turn the page and focus on achieving improved profitability, providing better service and focusing on our employees.”
Also commenting on Friday’s report, Avianca Holdings’ Chief Financial officer, Adrian Neuhauser added,
“2019 was a very difficult year, we incurred extraordinary costs in relation to the Avianca 2021 plan, such as the phase out of certain aircraft which had a significant impact on our results, as well as an increase in professional fees and advisory expenses associated with the transformation process. However, we have to acknowledge that the bond exchange as well as the financial re-profiling concluded successfully. This will allow us to focus on strengthening Avianca’s financial position in 2020 and 2021, as well as on improving our liquidity and deliver positive results to our stakeholders.”
In Q4 2019, Avianca’s cost per available seat kilometer – excluding fuel (Cask-ex) declined 2.8 percent to 5.9 cents, the best result since 2013. Revenues contracted 9.5 percent on reduced capacity and lower average fares, while operating expenses declined 9.7 percent as a result of “right sizing” company operations. As part of their fleet optimization strategy, capacity was reduced 6.9 percent during the fourth quarter and is expected to contract further in 2020. Additionally, future aircraft commitments were reduced from 108 to 88 aircraft.
For the full year, Avianca’s CASK-ex declined 4 percent to 6 cents and EBIT margin came in at 4.0%. Adjusted operating income declined 5.1 percent on reduced capacity, lower average fares, a slow macroeconomic environment and currency weakness. Additionally, operating expenses were reduced 1.9% on a 1.8% capacity reduction year-over-year. During 2019, the carrier sold 10 Airbus A318s and four A320s and has since sold an additional 10 Embraer E190s this year. At the close of the year, Avianca operated over 130 routes to 75 destinations in 26 countries. In 2020, the carrier received the prestigious “Best Airline in South America” award from APEX and is one of the select 5-star rated carriers in the world.
Source: Avianca Holdings