Q2 results: Jet remains off course, posts third straight quarterly loss
Jet Airways has posted a worse-than-expected loss for the third straight quarter on higher fuel costs and foreign currency losses
Mumbai: Jet Airways (India) Ltd posted a worse-than-expected loss for the third straight quarter on higher fuel costs and foreign currency losses. The airline, controlled by Naresh Goyal, however, said it was on course to save more than ₹2,000 crore in costs over the next two years as part of its strategy to achieve a financial turnaround. Mumbai-based Jet Airways plunged to a net loss of ₹1,297.46 crore in the three months ended 30 September, excluding its units. It had a net profit of ₹49.63 crore in the same period a year earlier.
Jet Airways had announced a plan to turn around its financial fortunes after posting a loss of ₹1,323 crore in the June quarter.
The airline had already saved more than ₹500 crore during March-August 2018, the airline said in a press release on Monday.
“At the strategic level, the company remains committed and is on track to realise most of the outcomes that were outlined as part of its turnaround strategy last quarter, including cost savings in excess of ₹2,000 crore over the next two years via strategic initiatives in the areas of sub-fleet simplification, reduction of maintenance, as well as selling and distribution expenses, renegotiation of contracts, together with a more productive resource deployment geared to enhance profit and revenue,” added the airline.
Jet Airways, which had a 14.2% share of the domestic aviation market in September, was widely expected to report losses in the September quarter because of rising costs.
In the past year, Brent crude has gained 16.46% to $70.98 a barrel, while the rupee has weakened 10.59% against the dollar.
Jet Airways’ standalone revenue increased 8.3% to ₹6,236.69 crore last quarter from ₹5,758.18 crore a year earlier.
Total expenses in the quarter climbed 32% to ₹7,534.15 crore from ₹5,708.55 crore a year earlier. The airline saw its fuel costs surge 59% to ₹2,419.76 crore in the September quarter from ₹1,525.66 crore a year earlier.
The results missed analyst estimates. A Bloomberg poll of three brokerages forecast a loss of ₹1,119.20 crore on a stand-alone revenue of ₹6,303.30 crore.
“With our clearly defined focus on profitability, we are in the midst of turning the ship around. We remain closely engaged with all our partners, who acknowledge the challenges faced by the Indian aviation industry and have been very supportive,” said Jet Airways chief executive Vinay Dube. “While we navigate the challenges posed by the current industry environment, our focus and attention remains on safety and operational reliability.”
Cash-strapped Jet Airways, which is seeking to raise fresh funds and boost operational efficiencies, has appointed Goldman Sachs Group and Boston Consulting Group as advisers to achieve its goals, Mint had reported on 30 October.
It needs to urgently raise cash to stay afloat as sharply higher fuel prices and a weak rupee have eroded its financial health.
Jet Airways continues to engage with financial stakeholders to support its funding requirements till it starts generating operational surplus and is actively working on the monetization of its assets and capital infusion, the airline said without elaborating.
Analysts tracking the sector said Jet Airways had been affected by higher oil prices, a depreciating rupee and falling yields due to the airline’s inability to pass on costs to customers. Essentially a full-service carrier, Jet Airways also faces stiff competition from budget airlines.
“The aggressive pricing strategies adopted by budget carriers have hurt Jet Airways adversely,” said an analyst with a foreign brokerage, who tracks the company. “Unless, it is able to bring down its non-fuel costs significantly and raise fares, it is expected to bleed in the coming quarters on back of higher costs.”
Jet Airways plans to add 11 fuel-efficient Boeing 737 Max aircraft this fiscal, which is expected to save costs further, the carrier has said.
The airline announced plans to start three additional services to Singapore each from Mumbai, Delhi and Pune. Last week, it commenced flights to Manchester from Mumbai.
The airline will also launch additional frequencies between Delhi-Bangkok, Mumbai-Doha, Delhi-Doha, Mumbai-Dubai and Delhi-Kathmandu during the winter schedule.
On Monday, shares of Jet Airways fell 5.96% to ₹242.05 on the BSE, while the benchmark Sensex declined 0.98% to 34,812.99 points. The results were announced after market hours.
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