Stobart profits soar as merger with CityJet nears takeoff
Stobart Group announced impressive interim results for the six months up to 31 August, but its proposed tie-up with Irish airline CityJet is still to be confirmed.
Reports last week suggested CityJet and Stobart Air were drawing closer to reaching agreement on the terms, with the deal expected to be wrapped up by the end of this month. Negotiations have been ongoing since spring.
For now, Stobart has announced a heads of terms agreement for CityJet to operate flights to 18 new destinations from April next year.
Read more: Heathrow expansion has made other airports antsy
The figures
Revenue from continuing operations rose 13 per cent from £57.6m to £65.3m, while underlying earnings before interest, taxation, depreciation and amortisation (Ebitda) rose 102 per cent to £20.2m.
The infrastructure group reported underlying profit before tax up from £4.6m last year to £16.2m and underlying earnings per share rising to 4.03p (from 1.58p in 2015).
Figures were boosted by the sale of 47 acres of an investment property in Speke, Liverpool, to Ford in May earlier this year. The deal delivered a profit on disposal of £11.6m in addition to the £9.1m revaluation gain recognised last year.
Why it's interesting
There have been plenty of murmurs surrounding a possible merger with CityJet and in these latest results, Stobart announced an agreement with CityJet to operate flights to up to 18 new destinations starting from April 2017.
Stobart, which owns Southend Airport and controls Stobart Air, says that should bring up to 600,000 new passengers to its London Southend Airport. Stobart owns 45 per cent of Stobart Air (fund manager Invesco Perpetual holds 40 per cent).
The company said: "Discussions with CityJet are at an early stage, and while the company felt it important to inform shareholders of this significant step, it does not have any further information to add at this time."
Watch this space.
What Stobart said
Chief executive Andrew Tinkler said:
We are very pleased to be working with CityJet to add new flights at London Southend Airport. This arrangement will open up around 18 new destinations, giving our customers more choice. These additional services could bring up to 600,000 passengers per year to the airport providing us with further momentum towards achieving our target run rate of 2.5 million passengers by 2018
Stobart Rail continues to cement its position as a leading partner to Network Rail and to secure further civil engineering contracts for other major projects.
It is extremely pleasing to see that we have achieved significant returns on investment from our property assets. The Speke transaction is an excellent example of this. The total gain since the acquisition of this investment property is £20.7 million, taking into account the £9.1 million revaluation gain in 2016.