Flag carrier Maldivian makes first profit in 3 years
Although the company has started making profits according to figures included in the PCB report, IAS is still below all measures of its financial viability.
By
Ahmed Naif
Island Aviation Services (IAS) has started making profit this year after the national airline's parent company suffered losses for the past three years.
IAS posted a net profit of MVR 10.74 million in the first three months of this year, according to the first quarter financial statements released by the Privatisation and Corporation Board (PCB) this week.
The figures show that IAS started to benefit from increased revenue in the first three months of this year and reduced overall expenses.
The IAS had a revenue of MVR 557.60 million in the first three months of this year:
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82.88 million or 17% more than the last three months of last year
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That is 118.83 million or 27% more than the first quarter of last year
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Revenue increased due to increased revenue from domestic flights, regional flights and seaplane flights
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Jets landed at IAS-operated airports increased by 88.9% and revenue from ground handling increased substantially; 17.79 million or an increase of 218%
Another reason for the improvement in profitability is that the company also reduced its expenses in the first quarter of this year. The report noted that:
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Reduced expenses by MVR 16.54 million; that is a decrease of 16%
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The main reason for the decline in expenditures is the reduction in the cost of chartering planes and other expenses incurred by planes
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Marketing, promotion and PR costs have also been reduced
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However, some administrative expenses and salaries of employees and directors of the company increased
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Administrative expenses increased by MVR 4.27 million, employee salaries by MVR 6.23 million and directors' salaries by MVR 1.46 million
Although the company has started making a profit, IAS is still below all measures of its financial viability.
However, the measures improved somewhat in the first quarter:
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The quick ratio, which measures the company's ability to pay short-term debt with its most liquid assets, rose from 0.38 to 0.47; however, this is still a low level
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The cash ratio, which measures the company’s ability to pay short-term debt with cash on hand, has moved from 0.02- to 0.01; the company still does not have enough money to pay off its debt
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The current ratio, which measures the company’s ability to pay short-term debt within a one-year period, moved from 0.44 to 0.53; the company's financial situation is still not good enough to pay off the debt
In addition, the company's receivables from ticket sales and other services on credit stood at MVR 663.8 million. The company has outstanding debts of MVR 2 billion to various parties.
