Jet Airways (India) Ltd’s results for the March quarter were better than Street estimates, a commendable feat considering the fact that the quarter was lean for aviation companies.
For the quarter, the company posted a stand-alone loss of Rs124 crore against a net profit of Rs59 crore in the same period last year. Analysts were expecting higher losses than what the company has reported. Expectations were low from aviation firms because of the sequential fall in load factor (which is natural considering December is the best quarter) and higher crude oil prices. Jet Airways’ fuel expenses have increased sharply by 51% and were 39% of the company’s total operating revenue compared with 30% in the same quarter of the previous year.
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The company’s stand-alone revenue increased by about 15% over the same period last year to about Rs3,250 crore. This growth was mainly driven by better performance from the airline’s international operations, which accounted for 59% of the total revenue and increased 17% from the year-ago period. The remaining revenue was derived from its domestic business, which grew at a slower pace of 12%. This is in contrast with the company’s performance in the December quarter, when Jet Airways’ domestic operations performed better than the international business.
During the quarter, Jet Airways has also performed well on a consolidated basis, but on the back of some extraordinary items. Rashesh Shah of ICICI Securities Ltd said that the company’s consolidated loss of Rs200 crore is much lower than his estimate of a net loss of Rs313 crore. “That’s mainly because of two things—there is an excess depreciation reversal of Rs68.3 crore due to a change in depreciation policy and secondly, there is a gain of Rs44 crore due to mark-to-market gains on derivatives,” said Shah.
Meanwhile, the demand environment is still looking decent if one looks at the number of passengers carried for the quarter, which was 15% higher over last year’s to 3.73 million. In a press statement, the company maintained that the softening in crude prices this month should help in some margin improvement.
Jet Airways’ stock has underperformed the Bombay Stock Exchange’s benchmark Sensex since the beginning of this calendar year. But so have shares of other aviation companies such as SpiceJet Ltd and Kingfisher Airlines Ltd, thanks to higher crude oil prices. Analysts say that the downsides from these levels appear limited. However, any cut in discretionary spending on travel, as the economy slows, could play spoilsport.
Graphic by Yogesh Kumar/Mint
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