Fiji's Air Pacific Group has reported a pre-tax loss of $14.3 million for the year to 31 March 2009, down sharply from the profit of $38.15 million a year before.
The group, which includes carriers Air Pacific and Fiji Airlines and a stake in a hotel in the Pacific island, reported that revenues increased by 16% to $648.47 million. Costs, however, were 22% higher at $655.14 million, says the company
Flagship airline Air Pacific incurred a pre-tax loss of $12.24 million, down $53.3 million from the profit of $41.09 million it reported a year before. Revenues increased by 15% to $622.78 million, while expenditure rose by 21% to $628.02 million. Financing costs were $7 million, versus earnings of $15.8 million the previous year.
"The 2008/09 financial year was extremely challenging for Air Pacific and the Group. While the first half of the year produced poor trading results, the final six months plunged to deep losses," says Nalin Patel, chairman of Air Pacific.
This was mainly due to the cost of fuel, which increased by $126.49 million to $297.72 million, including the impact of fuel hedging losses. Additional costs arose from a programme to overhaul the cabins of Air Pacific's Boeing 747 fleet. This also required the airline to lease a Boeing 747 aircraft to continue with its operations.
A strong US dollar also had a negative impact, given that the airline's expenditures are in the dollar while its earnings were in relatively weaker currencies. Floods in Fiji in January, and the global financial crisis that began last year and continued this year, also had an impact on both business and leisure travel, says Air Pacific.
"Although every efforts was made to generate improved revenue and remove cost, the global downturn, high fuel prices and Fiji's unique circumstances meant that revenue could not be generated sufficiently or costs removed rapidly enough to eliminate this loss," says John Campbell, managing director of Air Pacific.
Looking ahead, he adds that the results for the 2009/10 financial year were continuing to be "unsatisfactory, with the ongoing challenge of fuel costs, economic crisis and increased competition all impacting business".
"Financial results year to date have been significantly worse than for the same period the preceding year, and the 2009/10 year-end loss for Air Pacific will be substantially greater than the $12.2 million loss incurred in 2008/09," he adds.