BDM Comment:
The company's results for Q1'23 on the EBITDA MSSF 16 level, were in line with our expectations, which we perceive neutrally. Over the discussed quarter, the company generated revenues of PLN 313.8m (an increase of ca. 45.9% y/y, which was close to our forecasts).
Several factors contributed to such a significant increase in turnover, including an increase in the number of flights performed (by around +20% y/y, among others due to the effect of strong consumer demand supported by Ukrainians, weak condition of competitors and decreasing attractiveness of local offers due to rising prices).
In the area of air services, the company generated turnover of PLN 301.9 million (+46.0% y/y), and PLN 11.9 million (+41.3% y/y) in on-board sales. In Q1'23, cost of sales increased by 33.7% y/y to PLN 317.2 million, and the main factor influencing the higher level of costs compared to the same period of the previous year is primarily an increase in the cost of materials and energy consumption (+ 40.0% y/y to the level of PLN 132.3 m) and third-party services (+132.3% y/y - to the level of PLN 116.0 million) due to higher number of air operations and higher fuel prices.
The gross result on the sale of the company amounted to PLN -3.5 million (vs PLN -22.2 m in Q1’22). At the IFRS16 EBITDA level, Enter Air reported a profit of PLN 40.5 million (+123.4% y/y), which was in line with our expectations. The financial balance of the company to PLN 10.0 million (PLN 23.2 million of which were exchange differences from the balance sheet valuation - – in our forecasts we estimated the level of approx. PLN 60.5 million).
The result was significantly reduced by the loss on the settlement of entities accounted for under the equity method (PLN -13.8 million - applies to Chair Airlines AG), which surprised us negatively (we expected an impact of PLN -1.0 million). In the discussed period, the company generated a net result of PLN -16.5 million (vs PLN -68.7m in Q1’22). In Q1’23 cash flow from operating activities amounted to PLN -22.3 million (vs. PLN -35.3 million a year ago), investment CF = PLN -0.4million and financial CF = PLN -82.1 million.
At the end of March 2023, the group had PLN 185.8 million in cash (PLN -107.5 million q/q). The company has a positive outlook on the upcoming summer season, which will have a crucial impact on the results for the entire year.
The demand from tour operators has never been bigger, which is why Enter has decided to expand its fleet with several aircraft. This rapid fleet expansion is a result of the high demand for affordable and reliable charter services provided by Enter Air to customers not only from Poland but from across Europe.
• In Q1'23, the group generated PLN 313.8 million in revenue, which means an increase of approx. 45.9% y/y.
• In the area of air services, the company generated turnover of PLN 301.9 million (+46.0% y/y), and PLN 11.9 million (+41.3% y/y) in on-board sales.
• In Q1'23, cost of sales increased by 33.7% y/y to PLN 317.2 million, and the main factor influencing the higher level of costs compared to the same period of the previous year is primarily an increase in the cost of materials and energy consumption (+ 40.0% y/y to the level of PLN 132.3 m) and third-party services (+132.3% y/y - to the level of PLN 116.0 million) due to higher number of air operations and higher fuel prices.
• The gross result on the sale of the company amounted to PLN -3.5 million (vs PLN -22.2 m in Q1’22).
• The company's financial balance amounted to PLN 10.0 million (PLN 23.2 million of which were exchange differences from the balance sheet valuation). The result was significantly reduced by the loss on the settlement of entities accounted for under the equity method (PLN -13.8 million - applies to Chair Airlines AG).
• In the discussed period, the company generated a net result of PLN -16.5 million (vs PLN -68.7m in Q1’22).
• In the discussed period, cash flow from operating activities amounted to PLN -22.3 million (vs. PLN -35.3 million a year ago), investment CF = PLN -0.4million and financial CF = PLN -82.1 million. At the end of March 2023, the group had PLN 185.8 million in cash (PLN -107.5 million q/q).
• This year, significant impact on the Q1'23 results was caused by delays in the delivery of new aircraft, which eventually reached the company at the end of May. This resulted in experiencing higher technical costs than usual in the discussed quarter, as certain inspections had to be expedited to ensure the fleet was ready to operate the contracted flights in the spring schedule.
• The company has a positive outlook on the upcoming summer season, which will have a crucial impact on the results for the entire year. The demand from tour operators has never been bigger, which is why Enter has decided to expand its fleet with several aircraft. This rapid fleet expansion is a result of the high demand for affordable and reliable charter services provided by Enter Air to customers not only from Poland but from across Europe.
• In May 2023, the company's fleet was expanded with three new Boeing 737 MAX 8 aircraft (SP-EXC, SP-EXE, SP-EXF), which were delivered from the Boeing factory. Currently, the fleet consists of 28 aircraft, including 23 Boeing 737-800s and 5 Boeing 737 MAX 8s. Before the start of the summer season, the delivery of one more Boeing 737 MAX 8 is planned. Additionally, Chair Airlines recently received a new A320, bringing their current fleet to four aircraft, including three Airbus A320s and one A319. In total, the group will operate with 36 aircraft during the summer season, taking into account the planned delivery of the B737 MAX 8 and three additional aircraft leased on a wet-lease
• At the IFRS16 EBITDA level, Enter Air reported a profit of PLN 40.5 million (+123.4% y/y).
