The owner of Southend airport and regional airline Stobart Air expects to see further growth from its aviation interests.
Passengers using the airport grew by 25% to 610,492 in the half year to August 31 over the same six months in 2016.
Stobart, which also runs energy, rail and civil engineering businesses, saw half-year revenue almost double from £65.3 million to £124.6 million with pre-tax profits soaring from £10.8 million to £111.6 million.
Aviation earnings [ebitda] rose from £1 million to £6.2 million based on revenue up from £12 million to £97.5 million while the bulk of group profits came from investments in the half year.
The company said that its aviation division was forecast to grow and create “significant value” for the group, with passenger throughput at Southend airport forecast to rise to five million a year by 2022.
Stobart Group is investing in the launch of 11 new routes with franchise partner Flybe from the airport to attract more customers from the catchment area of 6.4 million people based within one hour’s travel of our airport.
“This investment will affect the short-term financial performance while sustainable routes are developed,” the company admitted.
“In the first half we have incurred non-underlying set up and marketing costs of £2.6 million.
“The Flybe franchise will add a fourth aircraft from winter 2017 and a fifth aircraft from summer 2018, adding approximately 250,000 passengers per annum.
“The increasing shortfall in airport capacity, combined with sustained demand for air travel to and from London means that Stobart Aviation remains confident that it will ultimately attract further airlines to operate from London Southend airport.”
Passenger traffic at Southend airport is “significantly” above last year with the start of Flybe operations.
“We remain confident in our strategy of growing both passenger numbers and the roster of airlines, and have detailed discussions underway with airlines for additional capacity in 2018 and 2019,” the company said.
A fourth easyJet aircraft will be based at Southend from next summer, adding around 270,000 passengers a year, Stobart confirmed.
Results for Stobart Air, operating under an Aer Lingus franchise, are ahead of expectations after strong summer trading.
“Performance has benefited from absolute yield increases year on year despite adverse foreign exchange headwinds and stable passenger volumes, supported by cost reductions,” the group said.
“Going into the winter season the booking profile and yields achieved thus far for the six-month period to February 2018 are meeting management expectations.”
The company generated “significant cash” through the sale and leaseback of eight ATR aircraft in the six months, chief executive Warwick Brady revealed while issuing interim results today.
“Passenger numbers at London Southend airport and our regional airline are up year-on-year as we continue to invest across the sector to meet the demands for increased capacity and improved customer experience.
“We are exploring ways to further develop this portfolio across our airport and airline asset base.”
A detailed project is underway at Carlisle Lake District airport “to explore the development of commercial operations” to drive new revenue streams for the aviation division.
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