Vueling Books 2008 Profit, Positive On Outlook

Spanish airline Vueling swung to a net profit of EUR8.5 million euros (USD$11 million) last year and gave an upbeat outlook for the first quarter.

Vueling, which made a EUR78.5 million loss in 2007, said on Wednesday its positive the outlook was based on lower oil prices and an expected rise in revenue per flight.

It is targeting a 10-15 percent rise in revenue per flight in the first quarter, with fuel costs seen about 40 percent lower. "For 2009 as a whole, we also expect substantial improvements," Vueling said.

Its 2008 outcome was the result of reducing its fleet and other costs, while it also benefited from EUR47 million of tax credits. The figures should be its last full-year results, given it is set to merge with Clickair, a unit of Spanish carrier Iberia, by end-June.

"The 2008 figures look good, although it is the tax credits which have pushed the airline's bottom line into positive territory. But the outlook is upbeat," a Madrid-based trader said.

The Clickair deal, conceived last summer as oil prices surged, will help deal with overcapacity in Spain as demand sinks with the economy in recession.

The airline formed through the merger with Clickair -- to be called Vueling -- will be the third biggest carrier operating in Spain, behind Iberia and Ireland's Ryanair.

COST CUTS

New management has been trying to turn the five-year old Vueling around by cutting its fleet and focusing on more profitable routes, boosting non-fare revenues, and tweaking supply to coincide with peak demand.

Vueling said on Wednesday it cut its fleet by 8 planes to 16 in 2008, and reduced its number of routes by 21 to 35.

Vueling carried 5.9 million passengers last year when revenue per flight rose 22.8 percent.

Total revenue rose 21 percent to EUR439 million, while costs grew just 8.1 percent to EUR470 million thanks to the airline's restructuring plan.