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Jet, SpiceJet may pare losses, Kingfisher seen deeper in red

Jet, SpiceJet may pare losses, Kingfisher seen deeper in red
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First Published: Mon, May 11 2009. 10 49 PM IST

 Report card: SpiceJet, Jet Airways and Kingfisher are expected to post a combined loss of around Rs600 crore for the March quarter, compared with a loss of at least Rs700 crore in the same quarter of
Report card: SpiceJet, Jet Airways and Kingfisher are expected to post a combined loss of around Rs600 crore for the March quarter, compared with a loss of at least Rs700 crore in the same quarter of
Updated: Mon, May 11 2009. 10 49 PM IST
New Delhi / Mumbai: Two of the country’s three listed carriers are likely to reduce losses in the March quarter from a year ago, helped by lower fuel prices and reduced seat capacity in domestic skies, analysts tracking the airlines said.
Report card: SpiceJet, Jet Airways and Kingfisher are expected to post a combined loss of around Rs600 crore for the March quarter, compared with a loss of at least Rs700 crore in the same quarter of fiscal 2008. Harikrishna Katragadda / Mint
Kingfisher Airlines Ltd, Jet Airways (India) Ltd and SpiceJet Ltd, that together account for two of three air passengers in the country, are expected to post a combined loss of around Rs600 crore for the quarter gone by, the fourth and final one of fiscal 2009, when they start announcing results on or before 30 June, compared with a loss of at least Rs700 crore in the same quarter of fiscal 2008.
The three listed carriers have not announced dates for announcement of their results but are mandated under India’s securities laws to report them before 30 June.
Most of such losses for the quarter to 31 March are likely to be accounted for by Kingfisher Airlines, which has seen its expenses soar after it started international flights late last year.
Jet, which scaled back overseas operations and leased out planes aggressively to boost revenues at a time of a glut in the business, together with low cost subsidiary JetLite Ltd, is likely to halve losses from January-March period in 2008.
Jet, that lost Rs384.48 crore including Rs163.30 crore on JetLite in the March quarter of fiscal 2008, may post losses between Rs150-250 crore, according to four analyst estimates.
Kingfisher, the largest airline by passengers carried in the latest quarter, that lost nearly Rs200 crore in the year-ago quarter, including Deccan Aviation Ltd that it took over in 2007, may increase its losses to at least Rs350 crore, according to aviation consultancy firm Centre for Asia Pacific Aviation, or Capa.
Low-cost carrier SpiceJet, too, is expected to reduce losses by 60%, analysts said. It may reduce losses to Rs40-50 crore, down from Rs123.60 crore in January-March last year, says Capa.
Jet is likely to offset some of its losses with the help of international revenue and trimming flight frequency on loss-making routes such as Mumbai-Shanghai-San Francisco, one analyst predicted.
“We expect much improved Ebitdar, thanks to full benefit of lower fuel prices. This should more than offset our estimates of declining seat factors as well as lower yields in the domestic market. As such, while we expect domestic performance to remain poor, we think international operations are likely to register much improved profitability,” Arun Subramanyam, analyst with DSP Merrill Lynch (India), wrote in the brokerage’s result forecast for the airline, the second largest in India by passengers.
Ebitdar refers to earnings before interest, tax, depreciation, amortization and rentals on aircraft and is considered a measure of operational profitability at airlines. Passenger counts in the domestic market for Jet and JetLite dropped some 26%—to 2.47 million in the March quarter, down from 3.34 million a year ago. CLSA Asia-Pacific Markets’s analysts N. Krishnan and Saurabh Mehrotra in their outlook for the company pegged its losses to be around Rs170 crore on a sale of Rs2,400 crore. Prabhudas Lilladher Pvt. Ltd’s analyst Mihir M. Shah’s estimate for the airline is around Rs202 crore, largely as falling jet fuel prices helped “Jet to report a positive Ebitdar of 10.4%” in the latest quarter. Domestic brokerage Edelweiss Securities Ltd estimated a Rs128 crore loss for the airline in the March quarter. Jet is expected to post 1.7% year-on-year decline in net sales to Rs2,700 crore, according to Mahantesh Sabarad, an analyst with Centrum Broking Pvt. Ltd. “All this would help improve its operating profit to 10.2% year on year,” Sabarad told Mint. Capa estimates Jet losses in the range of Rs200-250 crore, which includes about Rs50 crore for JetLite. The only firm that tracks both SpiceJet and Kingfisher, Capa expects SpiceJet’s losses to shrink to Rs40-50 crore but increase significantly to Rs350-400 crore for Kingfisher.
Kingfisher saw an 18.32% drop in passenger traffic in the March quarter to 2.66 million from 3.26 million. SpiceJet marginally increased its passengers by 2.6% to 1.18 million in the fourth quarter of fiscal 2009, up from 1.15 million in the last three months of fiscal 2008.
Capa’s India chief executive Kapil Kaul said that average ticket yields took a beating; dropping by as much as 30% for full service airlines such as Kingfisher and Jet in the fourth quarter of last fiscal year from the December quarter. Low fare carriers such as SpiceJet fared only marginally better, shedding some 26% in yields to Rs2,800 in the January-March months from Rs3,800 in the third quarter. “The only saving grace was 25-30% reduced fuel cost on average. That has (been) reflected in better results than what was expected,” Kaul said.
tarun.s@livemint.com
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First Published: Mon, May 11 2009. 10 49 PM IST