Given that InterGlobe Aviation Ltd’s net loss for the September quarter (Q2) was far worse than expectations, it is possible that investors expected Jet Airways (India) Ltd to follow suit. InterGlobe Aviation runs IndiGo, India’s largest airline in terms of market share. However, Jet Airways’ Q2 consolidated net loss of 1,261 crore did not come as a nasty surprise. Indeed, SBICAP Securities Ltd had estimated the airline to eke out a net loss of 1,430 crore.

Further, its performance on yields was relatively better. According to SBICAP, adjusted for 110 crore of refund estimate, Jet Airways’ passenger yields are down by about 6% year-on-year. IndiGo reported a 10% decline.

The Jet Airways stock went up by 5.2% on Tuesday, which was an upbeat day for the broader equity market. The airline had announced its results on Monday after market hours.

The Indian aviation sector continues to suffer owing to rupee depreciation (leading to higher costs) and unfavourable crude oil prices (though slightly softened lately).

Jet Airways’ fuel costs for Q2 increased as much as 55% over the year-ago quarter and accounted for nearly two-fifths of its operating revenues. Mark-to-market impact on account of a weaker rupee was 438 crore for the quarter.

According to Jet Airways, excluding the forex impact, September quarter CASK, excluding fuel, declined 4.2% year-on-year. That’s a positive. The airline was more or less able to maintain its RASK for the quarter. RASK is revenue per available seat kilometre, and CASK is costs per available seat km. Both are unit measurements for airlines.

So far, so good.

Investors will need much more to stay hooked on to Jet Airways. This is the third consecutive quarter that it has posted losses of over 1,000 crore each. Consolidated net loss for the half-year ended September now stands at a massive 2,587 crore. The negative net worth situation has worsened over the last six months. And then, there is the massive debt to deal with. Net debt at the end of September stood at 8,052 crore, while the latest market capitalization on BSE stood at 2,893 crore.

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It doesn’t help the industry as a whole that crude oil prices remain high and the rupee weak. Analysts complained that yields haven’t increased commensurately and unless that happens, profits will get squeezed.

In that backdrop, the Jet Airways stock, which has underperformed the BSE 500 index massively this year, doesn’t have many triggers to reverse its course. Lower crude oil prices will definitely help airlines, but global oil markets are not expected to witness a sharp drop in prices in the near term. Investors will do well to follow news flow and developments regarding a stake sale.

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