Mumbai: Jet Airways (India) Ltd on Wednesday reported a loss of Rs1,036 crore, , excluding those of its units, in the March quarter, as the airline saw its revenue decline and costs increase significantly during the quarter.
The airline, which had reported a profit (excluding financials of subsidiary JetLite) of Rs602.42 crore during the same period of the previous year, said that its loss had resulted in a negative net worth at the end of the March quarter.
Jet Airways, which has about 14.7% of the domestic market share, was widely expected to report a small profit though analysts expected the airline’s yields to decline during the March 2018 quarter on the back of a higher fuel price and a slow growth of domestic passengers (as compared to a year-ago period).
Jet Airways chief executive Vinay Dube said in a statement that the airline’s financial performance during the quarter was weaker because of the continuing increase in the price of Brent fuel without a corresponding increase in air fares, as well as mark-to-market adjustments because of a weaker rupee.
During the last 12 months, Brent crude price, which currently stands at $78.54 a barrel, has risen by 45.87%.
Jet Airways reported standalone revenue of Rs6,055.15 crore during the March 2018 quarter, down from the Rs6,271.21 crore it reported during the same period of the previous year.
The airline’s costs (total expenses) during the March quarter rose to Rs7,091.15 crore, up from the Rs5,668.79 crore that it had reported during the same period of the previous year.
The costs of the airline rose even after it had introduced several cost saving schemes, including salary cuts for a part of its workforce (during FY18).
On a consolidated basis (including financials of subsidiary Jet Lite), Jet Airways reported a loss of Rs636.45 crore during FY18 on the back of revenue of Rs25,177.47 crore.
The airline had reported a profit of Rs1,498.68 crore during FY17 on the back of revenue of Rs24,175.06 crore.
“The company has incurred a loss during the year and has negative net worth as at 31st March, 2018 that may create uncertainties," Jet Airways said in its results document.
“However, various initiatives undertaken by the company in relation to save cost, optimise revenue management opportunities and enhance ancillary revenues is expected to result in improved operating performance," it said.
Analysts tracking the sector said that higher oil prices, a slowdown in the airline’s middle east operations, falling yields, and failure to keep costs under control have led Jet Airways to have a negative net worth and report a huge loss at the end of the March quarter.
“The airline (Jet airways) also aggressively discounted ticket prices during the March quarter to get higher load factor, which also ultimately hurt its bottomline," said an analyst tracking the sector with an international brokerage, who did not want to be named.
“It is difficult to see Jet Airways reporting profit especially if oil prices stay high and the rupee remains weak. As it is, the airline’s costs are high and they have not been able to cut costs substantially during the last couple of years," the analyst said.