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Jet fares better in Q3, sees tiny profit in Q4

Jet fares better in Q3, sees tiny profit in Q4
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First Published: Fri, Jan 16 2009. 11 43 PM IST

 No profit yet: A CLSA report had indicated that the passenger occupancy factor of Jet—or the number of occupied seats on a plane—was at 60% in December, compared with the 63% needed to make a profit.
No profit yet: A CLSA report had indicated that the passenger occupancy factor of Jet—or the number of occupied seats on a plane—was at 60% in December, compared with the 63% needed to make a profit.
Updated: Fri, Jan 16 2009. 11 43 PM IST
Mumbai: Lower fuel prices were not enough to prevent higher losses for Jet Airways (India) Ltd in the December quarter. The airline posted a loss of Rs214.18 crore for the three months compared with Rs91.12 crore the previous year.
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Fewer passengers boarded planes in the quarter as ticket prices remained high and the economy slowed, despite the fact that the three months to December are traditionally busy ones for airlines because of festivals and holidays.
Even though income from operations during the quarter grew by a healthy 24.60% over the previous year, at Rs3,022.83 crore versus Rs2,425.98 crore, other operating expenses climbed faster at 40.13%—from Rs653.11 crore to Rs915.22 crore. These expenses include costs incurred in maintaining wide body planes, engine repairs and landing and navigation charges on the airline’s international operations.
Low-fare airline unit JetLite (India) Ltd reduced its net loss to Rs22 crore for the quarter against Rs86 crore for the same period last fiscal. Revenues at the carrier was up 10.3% at Rs474.1 crore for the reporting quarter against Rs429.9 crore for the year ago period.
No profit yet: A CLSA report had indicated that the passenger occupancy factor of Jet—or the number of occupied seats on a plane—was at 60% in December, compared with the 63% needed to make a profit. Ashesh Shah / Mint
The December quarter losses of Jet Airways were lower than the Rs384.53 crore loss for the quarter to 30 September on sales of Rs3,121.34 crore. In the September quarter, JetLite reported a Rs86 crore loss.
Shares of Jet Airways rose 1.26% on Friday to close at Rs157.05, even as the Bombay Stock Exchange’s benchmark Sensex index expanded 3.1%.
“The performance of Jet Airways was slightly better than expectations of the market. The operating margins are positive for the carrier owing to the sharp corrections in the jet fuel prices and (a) better load factor,” an analyst tracking aviation stocks with a Mumbai-based domestic brokerage said. He declined to be identified.
“Jet may trim its losses in this fiscal year as it will be having the flexibility of lower jet fuel costs. But it will have to bring back its lost business class travel to keep yields up,” he added.
Mahantesh Sabarad, an analyst with Mumbai-based Centrum Broking Pvt. Ltd, said Jet Airways was able to post positive earnings before interest, tax, depreciation and amortization (Ebidta)—an approximate measure of a company’s operating cash flows—because it did not reduce ticket prices when jet fuel prices were consistently falling in the last three months of 2008. The airline reported Ebitda of Rs164.69 crore for the quarter.
Fuel prices in Mumbai slipped to Rs33,719.47 a kl in end-December compared with Rs61,834.81 in end-September.
“Jet may not able to report the same Ebidta performance in the coming quarter if it is unable to arrest falling domestic traffic besides the fact that there was a sharp reduction in ticket prices from January. But considering the fall in jet fuel prices, Jet can possibly log a small (operating) profit in the next quarter,” Sabarad said.
A 5 January report by a local brokerage unit of CLSA Group indicated that the passenger occupancy factor of Jet—or the number of occupied seats on a plane—was at 60% in December, compared with the 63% needed to make a profit. The break-even passenger load factor has moved up to 70% in January after fare cuts by the airline, it added.
Shares of the airline have rallied upwards in the last one month primarily on the back of fall in fuel prices (a 7% cut on 31 December was pared by 3.6% increase on 15 January). For the airline to return to profitability, it will be critical that the load factors increase—though this is uncertain given slowing economic growth—even as yields remain under pressure, the report said.
During this reporting quarter, Jet Airways has logged a passenger load factor of 62% against the industry average of 60%.
“Even in these adverse conditions, Jet Airways could register positive operating profits because of high seat occupancy in international flights, high yields in domestic operations and reduced jet fuel prices,” chief executive Wolfgang Prock-Shuaer told Mint.
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First Published: Fri, Jan 16 2009. 11 43 PM IST