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Vueling reports €27.7m net profit for 2009

Vueling Airlines has announced a €27.7 million net profit for 2009, with a 4.6% net margin – a 2.7 percentage point (pp) increase compared to 2008 (net profit of €8.5m, and a 1.9% net margin).

In the fourth quarter of the year, Vueling declared a ‘virtual breakeven’ EBIT with a €0.5 million loss – excluding restructuring costs which amounted to €16.7 million – a 13-point improvement in margin on sales with regards to the same period one year earlier.

Total revenue for the year reached €601.6 million, up 36.3% over 2008’s revenue. On a unit basis, revenue per ASK increased by 6.4% to 5.91 eurocents. Revenue for 4Q09 was €160.4 million, an 83.8% increase on 4Q08.

Travel-agent sales contributed significantly to the increase in passenger numbers and gross revenue, and accounted for more than 31% of Vueling’s scheduled revenue, as a consequence of Vueling’s own GDS constant rollout and of codeshare agreements with Iberia.

Vueling’s overall unit cost based decreased by 12.3% to 5.21 eurocents per ASK, due to falling oil prices and cautious fuel hedging. During the year, Vueling’s gross fuel bill was 30.6% lower in comparison to the previous year in spite of the company operating a larger fleet – an average of 26 aircraft versus 21 in 2008. Ex-fuel CASK increased by 3%. Cost synergies are expected to be captured still in 2010 and ex-fuel cost reduction will be a leading target for Vueling in 2010.

As a consequence of the merger with Clickair, the new Vueling became second largest amongst Spain-based carriers during 2H09 behind Iberia and the fourth largest operating in Spain including all carriers. Vueling was also the leading carrier at four of its seven bases: Barcelona (with a 24% of market share), Seville (36%), Bilbao (18%) and Ibiza (14%).

In its outlook for 2010, Vueling says cost synergies are expected to benefit the airline by €15.5 million. Revenue synergies are expected to be captured in 1H10 to the tune of €20 million. These two items, together with recently-launched cost and revenue improvement plans (amounting to more than €25 million) should allow Vueling to more than offset the effects of increased competition and improve net margins of 2010 in respect to 2009.

Returning to the total revenue of €601.6 million reached last year, this was 36.3% up on 2008. Of these revenues, 75.9% came from ticket revenue, while a further 12.3% came from ancillary products.

Ancillary revenue per passenger fell by 18% in the year due mainly to two factors – the change in insurance policy form opt-out to opt-in following EU regulations and an increase in sales through the offline channel, where some of the ancillary products are included in the basic fare. The fall of ancillary product was compensated by successful new ancillaries such as pet and unaccompanied-minor charges, and also by increases in ancillary revenue such as seat assignment or new payment methods charges.

Increased fares in the offline channel largely offset the negative impact that the increase in sales through the offline channel caused in the ancillaries per passenger rate. In fact, ancillaries per passenger in the online channel stood at €13.6 per passenger.

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