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Spain's Vueling Airlines Says Cash to Grow on Cuts

Source: Bloomberg - Wed 3rd Nov 2010

Vueling Airlines SA, the Spanish low- cost carrier sitting on more than 250 million euros of cash, said it expects the amount will keep growing as deepening cost cuts and expansion abroad fuel profit.

The carrier has yet to decide what to do with its cash, and options include paying a dividend and expanding the fleet, Chief Financial Officer Antonio Grau said in a telephone interview.

The Barcelona-based company may do both, Grau said. "If shareholders decide on some sort of dividend it would be compatible with the financing of planes. The cash position is very significant and we expect it to keep rising."

Vueling has leased three more planes for 2011 and is in talks to add another three, to increase its fleet from 36 to 42 aircraft. The carrier is considering opening bases in France, Italy or the Benelux countries in the first half of 2011 and is looking at other European markets, the executive said.

Vueling ended the third quarter with 258.7 million euros in cash, 74 percent more than a year earlier, the company said on Oct. 27. It also had 24.2 million euros in debt.

Average revenue per passenger rose 1 percent to 79.15 euros in the quarter from a year earlier. Costs excluding fuel fell 4 percent. Vueling has pledged to cut expenses further in 2011.

"Fuel, airports services, fleet financing, structure costs are all going to be areas where we will have initiatives to reduce expenses," Grau said.

Vueling, which is 46% owned by Iberia Lineas Aereas de Espana SA, currently services 50 airports.

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