BRUSSELS, Belgium and LONDON, Oct. 17, 2001 (PRIMEZONE) -- Virgin Express Holdings plc (Nasdaq:VIRGY) (Euronext Brussels:VIRE).
Highlights
-- Profits of EUR 3.0 million versus losses of EUR 7.3 million last
year.
-- Profitable 9 months year to date versus losses of EUR 27.5 million
last year.
-- Remaining on track to break-even 2001.
-- Load factors above 90% throughout the quarter.
-- Significant opportunities to expand.
-- Keen to help the Belgian Government restructure Sabena and build a
profitable Belgian airline.
-- Formal interest in acquiring certain assets of Sabena and its
operations.
Awaiting information on Sabena.
Chairman's Statement:
"We are pleased to announce EUR 3.0 million profits in 3rd Quarter 2001 versus a loss of EUR 7.3 million in 3rd Quarter last year. Nine months profits of EUR 1.3 million have been achieved versus a loss of EUR 27.5 million in the first nine months of last year, as a result of a successful restructuring program in year 2000.
Load factors for the quarter rose to record levels averaging 91.8% compared with 80.2% last year. Yields were up 6 % against 3Q 2000. With a fleet size half that of this time last year, quarterly revenues are down only 33% whilst operating costs have been reduced by 43%. Whilst load factors suffered temporarily following the tragic events of 11th September 11th, they are currently running at 88%. Throughout the period the Euro has remained historically very weak against the US Dollar and this continues to hold back even greater profitability, as most major costs are USD based.
The Brussels market suffers from the over-capacity created by the reckless growth of Sabena. Having failed to restructure over recent years, Sabena is now paying a heavy price. It is currently in administrative protection. Virgin Express is very keen to maintain as many services as possible between Brussels and key European cities. We believe there to be a significant opportunity to develop a new, strong Belgian airline from a Brussels hub. This airline would cater for both the business and the leisure markets.
Following discussions with the Belgian Government and a significant rise in our share price last week, we announced a formal interest in acquiring certain assets of the company and its operations. If negotiations prove successful, it is hoped that a large number of aviation related jobs in Belgium would be saved and passenger services maintained. Discussions are still at an early stage. We await the necessary business information from Sabena management before we are able to make a specific offer.
We remain on track to deliver break-even profits for year-end, in spite of the problems caused by the September 11th tragedy. Clearly this forecast is subject to there being no major disruptions to our business from the restructuring of Sabena and to the continuation of current contracts."
Results for the Period
In the third quarter of 2001 the Company reported a pre-tax profit of EUR 3.0 million versus pre-tax loss of EUR 7.3 million in the third quarter of 2000.
For the first nine months of 2001, the Company reports a pre-tax profit of EUR 1.2 million, compared to a pre-tax loss of EUR 27.5 million for the same period in the year 2000.
Net income per IDS and ADS for the quarter are shown in the table below:
Earnings per IDS and ADS
Basic 3Q 2000 3Q 2001 Nine Months Nine Months
2000 2001
EUR per IDS EUR (1.48) EUR 0.61 EUR (5.60) EUR 0.27
USD per ADS USD (0.45) USD 0.18 USD (1.76) USD 0.08
Average Shares 4,907,500 4,907,500 4,907,500 4,907,500
USD/EUR
(Average)
Exchange Rate 0.905 0.890 0.942 0.896
BEF/USD
(Average)
Exchange Rate 44.57 45.31 42.82 45.04
USD/EUR
(Ending)
Exchange Rate 0.877 0.913 0.877 0.913
BEF/USD
(Ending)
Exchange Rate 46.00 44.18 46.00 44.18
Revenues
Despite an overall decrease in production of 56%, total revenues only decreased by 33% to EUR 58.9 million in the quarter ended 30 September 2001. The company's scheduled revenues dropped 11% to EUR 50.2 million, compared to EUR 56.5 million for the third quarter of last year. Capacity reduction of 27% was largely compensated by a significant increase of 11.6 percentage points in load factor for the third quarter, which averaged historical highs of 91.8% versus 80.2% a year ago.
System unit revenues and yield in scheduled services have increased respectively to 7.92 eurocents per ASK and 8.63 eurocents per RPK, corresponding to respective increases of 22 % and 6 % compared to the same quarter of last year.
Since November 2000, the company has focused on its core business, scheduled flights, and as a result profitability has improved and charter revenues have dropped 89%.
For the first nine months of the year, overall revenues decreased 26%, bringing total revenue at EUR 168.8 million, compared to EUR 227.8 million for the same period in 2000. Again this decrease is due to an overall reduction in capacity of 51% compensated largely with a significant improvement in the scheduled activities, i.e. increase in load factor (2001: 85.1% versus 2000: 72.9%) of 12.2 percentage points and higher system unit revenues, up 25% from 6 eurocents per ASK for the first nine months of 2000 to 7.52 eurocents per ASK for the equivalent period in 2001.
The company transported 1,915,011 scheduled passengers, a 16% decrease compared to the first nine months of last year.
Expenses
The company has completed a successful restructuring and simplification process. This has resulted in reaching the targeted goal of a return to profitability. Revenues decreased 33% over the quarter, but the company succeeded in reducing the costs by 43%, despite the continued unfavorable impact of a strong USD/Euro exchange rate and high fuel price levels.
Total operating expenses decreased to EUR 55.1 million in the third quarter, compared to EUR 95.9 million in the same period of the previous year. For the first nine months, operating expenses dropped from EUR 256.3 million in 2000 to EUR 165.8 million 2001.
Because of the tough trading conditions, all costs associated and impacted by the US Dollar still weigh high on our operational costs. Nevertheless, the company has succeeded in keeping the non-impacted costs under control, and has therefore been able to report a positive operating contribution.
Adverse trading conditions are indeed still impacting significantly on the results of the company. The US Dollar/Euro exchange movement is hedged for 69% of our remaining 2001 requirements, as well as approximately 87.5% of our fuel requirements.
A table of quarterly results for the first nine months is attached.
With the exception of the historical factual information, the statements made in this press release constitute forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are based on current expectations and involve certain assumptions, risks and uncertainties that could cause actual results to differ materially from those included or contemplated by the statements. The company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the issuance of the press release.
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