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Jet Airways’ quarterly earnings disappoint on overseas services

Jet Airways’ quarterly earnings disappoint on overseas services
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First Published: Thu, Feb 03 2011. 12 11 AM IST
Updated: Thu, Feb 03 2011. 12 11 AM IST
Jet Airways (India) Ltd reported 20% growth in stand-alone year-on-year (y-o-y) revenue for the quarter ended December, against 32% for the September quarter. Of course, the base for the September quarter was lower, but given that the December quarter is supposed to be the best for aviation firms, the numbers could have been better.
The disappointment has come from the company’s international operations. International revenue had increased 27% in the September quarter, but slowed to 18.5% in the December quarter. The domestic business has performed relatively better, posting 21% growth, though it, too, grew at a much faster y-o-y pace of 39% in the September quarter. In the September quarter, the international business had boosted Jet Airways overall financials. According to an analyst, “The international business has grown at a slower pace compared to the domestic business because of a marginal decline in revenue per passenger.”
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In a note to clients last September, analysts from Motilal Oswal Securities Ltd pointed out that Jet Airways’ outlook for its international business is positive as the firm has significant cost advantage versus other international carriers. That, however, isn’t reflected in the financials this time.
Meanwhile, the firm’s subsidiary JetLite (India) Ltd has performed well and posted a profit of Rs 25.6 crore compared with a loss of Rs 62 crore in the September quarter. Overall, operating profit margin of the stand-alone business has marginally improved by 34 basis points to 19.42%. That compares favourably with the 221 basis points decline in the operating profit margin of SpiceJet Ltd to 13.7%. Fuel costs have risen sharply in the recent past and this is not positive for the sector.
Jet Airways’ operating profit increased 22% to Rs 633 crore, but net profit grew at a slower 12% to Rs 118 crore because of deferred tax.
Stocks of the three listed aviation firms—Jet Airways, Kingfisher Airlines Ltd and SpiceJet—have fallen sharply (40-47%) from their highs in November. During the same period, the Bombay Stock Exchang’s Sensex index has lost 13.3%. Higher fuel prices will be a key concern going forward for all the stocks in the space. The current quarter is leaner for aviation companies, so that should reflect in the financial performance.
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First Published: Thu, Feb 03 2011. 12 11 AM IST