Mumbai: Jet Airways (India) Ltd, India’s largest passenger airline, posted a 10.54% increase in profit for the three months ended March, signalling a revival in air traffic across the country.
Net profit rose to Rs58.58 crore from Rs52.99 crore in the year-ago quarter. It made an operating profit of Rs1,153.74 for the fiscal year compared with a loss of Rs306.75 crore in the year ago, thanks to improvements in the way it runs its business.
Still, that wasn’t enough to prevent the company from posting its third annual net loss in a row, widening to Rs467.64.crore from Rs402.34 crore in the last fiscal year, pushing the stock down 3% on the Bombay Stock Exchange, or BSE, to Rs495.20, while the benchmark Sensex rose 0.68% to 16,519.68 points.
The quarterly profit exceeded analysts’ estimates but are below expectations for sales, said Rashesh Shah, an analyst at domestic brokerage ICICI Securities Ltd.
“However, Jet Airways results signal robust and improved passenger traffic scenario,” he said. “Moreover, Jet Airways could manage to post good results because of a series of cost-control measures.”
Annual loss: A Jet aircraft at the Mumbai airport. The carrier’s annual loss widened to Rs467.64 crore from Rs402.34 crore in the last fiscal. Abhijit Bhatlekar/Mint
Meanwhile, operating profit for the fiscal is attributed to the carrier adapting to changing market dynamics, such as the introduction last year of Jet Airways Konnect, an all-economy, no-frills, low-fare brand that went head-to-head with other such airlines such as IndiGo, operated by InterGlobe Aviation Pvt. Ltd, and SpiceJet Ltd.
Senior executives at Jet Airways indicated that the airline would continue to focus on the low-fare space but at the same time cautiously woo business traffic.
“We will also focus on the international routes as a majority of them have broken even,” said a senior executive, who declined to be named because he is not authorized to speak to the media.
In its outlook statement, Jet Airways said it has been “successful in adapting to market realities and has been able to lease out excess capacity for the medium term”.
A series of cost-control measures and introduction of new products helped Jet Airways achieve its operating profit margin of 11.14% for fiscal 2010, compared with an operating loss margin of 2.67% in the last fiscal.
But Jet Airways is not out of the woods yet. It still has debt of Rs13,759.50 crore, and posted loss before tax and other income of Rs81.71 crore for the March quarter, against Rs177.61 crore in the year-ago period.
For the full fiscal, it reduced losses before tax and other income to Rs801.23 crore from Rs1,944.59 crore in fiscal 2009.
The operating profit margin for the March quarter marginally narrowed to 15.09% from 17.62% in the third quarter of the same fiscal, which is typically the best quarter for airlines because of the festive and holiday season.
Domestic airlines, which incurred losses of $2 billion (around Rs9,360 crore) in fiscal 2009, are showing signs of revival as domestic passenger traffic grew 21% in the quarter ended March from the corresponding period last fiscal.
According to the International Air Transport Association during the January-March quarter, premium (business class) travel expanded at an annualized rate of 25% over the fourth quarter.
However, the fall in premium travel in 2008-09 was so steep that the size of the market is still 15% smaller than what it was before the global economic slowdown that started at the end of calendar 2008.
Separately, Jet Airways, in a statement, said it has redesignated Nikos Kordassis as its chief executive officer.
PTI contributed to this story.