Air Astana expects record profit thanks to early cuts

October 26. Air Transport World

by Kurt Hofmann

Air Astana expects record profit thanks to early cutsAir Astana is expecting a record profit this year, surpassing the $35 million earned in 2007, thanks to cost-cutting measures implemented before the global economic crisis hit both the airline and Kazakhstan last autumn. “KC was very affected. Our traffic collapsed. But all this happened during a time when KC’s cost-cutting program already was in progress,” President Peter Foster told ATWOnline last week in Almaty. Astana cut capacity by 33% compared to 2008 and it faces a 15% decline in revenue. Business class passenger numbers have fallen 11%, with an overall decline of 6% expected this year. It expects no hedging losses, however, and Foster said its net margin in 2009 “is more than 10%.”

The carrier operates in a unique environment, a huge country with just 16 million people. “In this area, seven frequencies per week is a lot,” VP-Marketing and Sales Ibrahim Canliel said. KC uses Almaty has its long-haul hub and Astana, the capital, as a hub for domestic flights and service to neighboring countries. The airline has no plans to compete on overcrowded routes between Europe and East Asia and intends to focus on Central Asia, which has 60 million potential customers, according to Canliel. Routes to Azerbaijan, Georgia, Ukraine and secondary markets in Russia are in the planning stages. “That’s why we are not in a rush to join an alliance. Our market is very special,” Canliel said. Sixty percent of KC’s business is international.

Foster warned that there are no signs of revenue recovery in 2010 and he said KC is counting on its partnership with Lufthansa to enhance its European presence. “We have always had a cautious approach to growth and we are sticking to our formula,” he said. Once it makes a decision on the composition of its future long-haul fleet (ATWOnline, Oct. 21), it will consider flying to Singapore, Hong Kong and Tokyo. “That is far ahead. US destinations are not out of the question in the future either,” he said.