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Jet Airways Q4 net drops 61% to Rs88 cr

Jet Airways Q4 net drops 61% to Rs88 cr
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First Published: Tue, Jun 26 2007. 10 35 PM IST
Updated: Tue, Jun 26 2007. 10 35 PM IST
P. Manoj
The net profit of India’s biggest private domestic airline Jet Airways (India) Ltd declined 61% during the January-March 2007 quarter to Rs88 crore from Rs227.12 crore a year earlier, as competition from budget airlines forced the carrier to cut ticket prices. The Mumbai-based carrier reported a one-time gain from the sale of an aircraft in the year-ago period.
However, the profit bettered analyst expectations because the company increased fuel surcharge and passenger traffic rose. A Bloomberg survey of six analysts resulted in a median estimate of Rs54.6 crore.
Jet’s owner Naresh Goyal, who bought Sahara Airlines Ltd in the nation’s biggest aviation merger in April, needs to bolster profit to fund new plane purchases and retain its lead as competition increases with Kingfisher Airlines Ltd. Carriers in India are merging or cooperating with other companies to reduce expected $500 million losses caused by overcapacity.
“Indian carriers are going to turn around now,” said Kapil Kaul, the chief executive officer of the India unit of the Centre for Asia Pacific Aviation (Capa), which advises airlines. “Jet is leading the way in the mergers game as obviously it has the most at stake.”
Jet bought Sahara for Rs1,450 crore to ease competition in a market where seven new carriers have started flying in the past four years. Jet will convert Sahara into a low-fare airline called JetLite Ltd. to compete with Deccan Aviation Ltd and SpiceJet Ltd, India’s biggest budget carriers.
Rival Kingfisher has acquired a 26% stake in Deccan and the two airlines will seek to reduce costs and cooperate on services, chairman Vijay Mallya has said.
Consolidation in India’s aviation industry comes as Capa forecasts combined annual losses of $500 million this year. The mergers will lead to fewer players, allowing airlines such as Jet to increase fares.
Despite falling profits, Jet Airways declared a 60% dividend (Rs6 on equity shares of Rs10 each) for fiscal year 2007 prompting its shares to rise 0.69% to Rs808.5 per share on the Bombay Stock Exchange.
The total income of the airline rose 22% in the quarter ended March, to Rs198 crore from Rs161 crore a year ago. The company’s wage bill for the fourth quarter rose to Rs26 crore from Rs19 crore a year earlier as it hired more pilots, engineers and cabin crew to fly to new routes. The net profit in the fourth quarter is the second successive quarterly profit for the airline in 2006-07 and sparks hopes of a turnaround in the airline industry in India. Jet had suffered losses in the first two quarters of 2006-07.
The net profit of Jet for the year ended 2006-07, too, dropped 94% to Rs27.94 crore from Rs452 crore a year ago, the company said in a statement.
It earned Rs740 crore in the 12 months to March 2007 from Rs601 crore a year earlier.
The company’s board has also cleared a plan toraise $400 million through a rights issue to part-fund a $2.1 billion purchase of 20 wide-bodied aircraft from Boeing and Airbus.
The funds will also be used to turn around Jet Lite.
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First Published: Tue, Jun 26 2007. 10 35 PM IST