Strong 2017 revenues for West Atlantic
01 / 03 / 2018
Swedish cargo airline West Atlantic saw strong revenue growth in full year 2017, mainly generated from the contract with Royal Mail and the rise in e-commerce traffic.
Revenues of SKr1.6bn were up 20.4 % year-on-year, but there were “significant sub-charter costs”, caused by aircraft delivery delays of Boeing 737-400 aircraft, maintenance disruptions for the Boeing 767-fleet and effects of parked ATP freighters. EBITDA for the year was near static, at SKr126.3m.
Six B737-400Fs were put in service, of which five were delivered on long term operating lease agreements.
West Atlantic chief executive and president Fredrik Groth said: “Demand for our services is strong as the air logistics industry is thriving from the effects of Ecommerce growth. While improving financial results for the fourth quarter is encouraging, focus remains on strengthening further through cost control and profitable growth.”
He added: “Most of our customers are seeing growth, thus tendering for additional capacity. Almost all of our customers are forecasting the need for additional capacity in 2018 and onwards, with most of the growth coming from the larger aircraft sectors.
“The company is now one of the largest B737 freighter operators in Europe as well as a growing provider of 40 ton + capacity with our B767s. The demand for the smaller aircraft (CRJ and ATP) is more stable, but we are seeing increased competition in these sectors from smaller operators.”
In December 2017, West Atlantic took delivery of an additional B737-400 which went into service for DHL. It now operates eight aircraft in total for DHL.
The company reported that lessor GECAS and Boeing had encountered "certain delays" in the delivery of West Atlantic’s first B737-800, which now is expected to take place at the end of March 2018.
Groth continued: “The remaining three B737-800 are scheduled to arrive in August and November 2018, and in January 2019. West Atlantic will be the first operator of the type, which is expected to make a significant trend change in the market toward these more modern and fuel efficient aircraft.”
The group also sees “high probability” to increase the B767 fleet during 2018.
Some of the airline’s existing customer contracts are priced below market rates, and yields on these are below expectations, said Groth, adding: “The group is working to improve the pricing of these as the contracts are up for re-tender.”
A “large focus” for the carrier is on identifying new opportunities for its parked ATP aircraft.
Said Groth: “The focus is to maintain 10-15 aircraft in profitable production, while we aim to sell or lease out excess aircraft to operators outside of Europe. Some aircraft will also be parted out so that these parts can be used to reduce spare part cost for the operating fleet.”
On the market outlook, Groth commented: “E-commerce growth and strong economic fundamentals in Europe is leading to high demand for additional aircraft. To be able to capitalize fully on the market growth opportunities, the Group’s balance sheet must be strengthened.”
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