New Delhi: The nation’s biggest domestic carrier, Jet Airways (India) Ltd, posted its first loss in five quarters after record fuel prices eroded gains from carrying more passengers.
The carrier had a net loss of Rs91.12 crore in the three months to 31 December, against net income of Rs40.04 crore a year earlier, Jet Airways said in a release to the Bombay Stock Exchange on Monday. Sales rose 28% to Rs2,520 crore from Rs1,970 crore.
Fuel costs, which account for more than a third of total spending at Indian carriers, rose to a record in the last quarter, hurting profit at Jet Airways and other carriers. The Mumbai-based airline, which bought Sahara Airlines Ltd last year to take on low-cost carriers, is adding services to China, the US and the West Asia as domestic competition increases.
“It will continue having losses in the short run because it’s getting into new routes,” Hemant Patel, an analyst at Enam Securities Ltd in Mumbai, who has an “underperformer” rating on the stock, said. As the share “of the international routes becomes larger, it will start becoming insulated to swings in prices and the overall mix may improve.”
Jet Airways will consider raising $800 million (Rs3,152 crore), the company told the Bombay Stock Exchange in a separate statement.
This amount will include the plan to sell $400 million of shares that was approved by the company’s board on 26 June.
Fuel costs, the airline’s biggest expense, rose 50% to Rs917 crore, Jet Airways said.
Jet fuel in Singapore trading had its biggest gain in more than two years in the quarter, boosting costs for Asian airlines. It surged to a record $116.80 a barrel on 26 November and traded at $102.90 on Monday.
The airline, controlled by billionaire Naresh Goyal, needs to earn a profit to fund purchases of new planes and expand services to North America and Europe. The airline has more than 50 planes on order from Boeing Co. and Airbus SAS, including Boeing’s 787 Dreamliner.
The carrier started flights to the US and Canada last year and began services to West Asia this month.
Shares of Jet Airways ended up Rs9.40 each, or 1.3%, to Rs752.40 on the Bombay Stock Exchange. The earnings were announced after the close of trade.
The airline bought Sahara in the nation’s biggest aviation takeover to compete with new budget carriers. Jet turned Sahara into JetLite Ltd, a discount airline, to retain market share as Kingfisher Airlines Ltd and Deccan Aviation Ltd combined to cut losses and use each other’s networks to win more travellers.
As many as six airlines have started in India in the past four years, attracting rail travellers with fares as low as Re1. The carriers, which have more than $30 billion of aircraft on order, have cut fares to compete with Jet Airways.
Low-fare airlines will double their market share to 70% by 2010 from 35% in 2006, according to the Centre for Asia Pacific Aviation.
Air travel in India will grow by an average 7.7% annually through 2025, compared with 7.2% growth for China and 4.8% globally, according to a December 2006 projection by Airbus, the world’s biggest plane maker.