New Delhi: India’s airlines will likely post earnings for the three months ended 31 December that will reflect the benefits of a steep fall in fuel prices and capacity moderation due to the SpiceJet Ltd’s reduction of its fleet size and operational constraints.

“December was the best performing month for all carriers—both yield and occupancy rose due to SpiceJet’s challenges," said Kapil Kaul, chief executive (South Asia) at consulting firm Capa.

SpiceJet cancelled about 2,000 flights in December.

The airline has since submitted a restructuring plan to the aviation ministry that involves a change in ownership and management control, and capital infusion.

Brent crude plunged 57.6% from $115.06 a barrel on 19 June to $48.73 per barrel on Thursday. Jet fuel costs account for approximately 45-55% of the operating costs of local airlines and a 4% reduction in fuel cost may potentially add around 2% to the operating margin, analysts say. Capa estimates this will help Jet Airways (India) Ltd post a profit of 125-180 crore in the December quarter.

Jet Airways reported a net loss of 267.89 crore in the same quarter in 2013.

These estimates exclude one-time items including a gain from the slump sale of Jet’s frequent flier programme to Etihad Airways PJSC. Jet will announce its results on 6 February.

SpiceJet, Capa estimates, will post a loss of 240-300 crore.

The airline posted a net loss of 173 crore in the same quarter in 2013.

ICICI Securities Ltd did not have an estimate of SpiceJet’s earnings for the quarter, but said Jet could report a 90.3 profit on revenue of 5,930 crore.

Both IndiGo, now the largest domestic airline with a nearly 32% market share, and GoAir will be also profitable, as will be state-owned Air India Ltd. “Air India will have the best performing quarter in recent times," Kaul said. Air India reported a surprise net profit of 14.6 crore in the month of December, compared with a loss of 168.7 crore in the year-ago period, Mint reported on 12 January, citing an airline official.

The state-run airline’s operating profit in December jumped to 183 crore from just 2 crore in the year-ago period because of lower crude oil prices and an increase in passenger revenue.

The current quarter will be a challenging one for the industry, said Kaul. “Q4 pricing continues to be negative and could impact overall FY 15 financials. Demand and supply dynamics are not in favour of Indian carriers. Capacity growth for most airlines remains muted," he said.

“Capacity moderation and sensible pricing are key to sustainable turnaround."

Capa expects the industry to add 12 aircraft in the quarter and about 30 in the next financial year.

Shares of Jet Airways were down 0.86% at 436.50 on the BSE. Shares of SpiceJet closed 4.74% up at 22.10 each on a day the benchmark Sensex closed up 0.41% at 29,006.02 points.

Air passenger traffic grew 9.7% last year compared with 4.43% in 2013 when it had reversed the decline of 2012 that also marked the grounding of Kingfisher Airlines Ltd, according to data from the Directorate General of Civil Aviation (DGCA).

India’s scheduled airlines carried 67.73 million passengers in 2014 compared with 61.42 million passengers in 2013 and 58.81 million in 2012.

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