Jet Airways expects Gulf business to remain under pressure in Q42 min read . Updated: 16 Feb 2018, 06:49 AM IST
The Gulf market remains depressed and continues to be under pressure, says Jet Airways chief financial officer Amit Agarwal
Mumbai: Naresh Goyal-owned Jet Airways India Ltd expects its business in the Middle-East and Gulf markets, where it deploys about 15% of its total capacity, to remain under pressure during the March quarter, a top executive of the airline said.
The Gulf market remains depressed and continues to be under pressure, Jet Airways chief financial officer Amit Agarwal said on the company’s post-earnings call to analysts on Thursday.
However, the airline is seeing the benefits of its European partnership with Air France-KLM, which was announced in November 2017. The agreement connects 44 destinations in India with 106 destinations in Europe.
“We are pleased with European operations which are starting to see better quality of passengers and the benefit of the network is kick starting," Raj Sivakumar, the airline’s vice-president (revenue management and routes) said.
The domestic operations of the airline may face pressure during the January-March quarter, traditionally a weak quarter for Indian airlines.
“We will stay competitive in our domestic operations," Sivakumar said, adding the airline’s performance during the quarter could also depend on the competition in the domestic sector.
Jet Airways had on 14 February reported standalone revenue of Rs6,349.34 crore during the October-December 2017 quarter and a net profit of Rs165.25 crore, a 45% drop on an annual basis.
“Jet Airways have been seeing lower yields in the Gulf market as the region is going through economic stress due to the massive rout in oil prices during the last two years. Also, lot of capacity from Indian low cost carriers (LCCs) like IndiGo, SpiceJet and Air India Express has been deployed in the region, which has hurt the airline," said SBICap Securities analyst Santosh Hiredesai, who tracks the aviation sector.
“Middle East can be expected to be weak for Jet Airways, as it is a market where their cost structure, and their current pricing, will not enable them to be profitable," Hiredesai added.
The airline currently has 119 aircraft in its fleet, consisting of 82 Boeing 737s, 10 wide-body Boeing 777s, and nine Airbus A330s, apart from 18 jet ATRs. The airline is expected to begin the deliveries of its Boeing 737 Max airplanes from June 2018.
Jet Airways hopes to bring down its non-fuel costs by 12-15% in the next 8-10 quarters, Agarwal said, adding this would be achieved by renegotiating contracts with vendors, and channel partners, reducing selling and distribution costs, and aircraft maintenance costs.