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BW Businessworld

Jet Airways Back In The Black After 5 Quarters

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After being in red for five quarters in a row, Jet Airways Group flew back into the positive terrain with a net income of Rs 36.4 crore in the June quarter on the back of higher yields and cost management.

The country's largest airline had posted a net loss of Rs 123.2 crore in the same period last year.

Jet Airways today said the profit would have been much higher had it not been for the huge forex losses on account of the falling rupee which resulted in an outgo of Rs 170.3 crore.

However, a 148 per cent jump in Ebitdar (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) to Rs 825.5 crore against Rs 333 crore a year ago, cushioned the impact of forex loss.

This also saw its EBITDAR margin nearly double to 16.1 per cent from 8.9 per cent.

The consolidated group revenue grew by 31.4 per cent to Rs 5,274.8 crore during the period driven by a 10 per cent growth in domestic traffic, while the industry growth was a paltry 1 per cent during the quarter.

The domestic yield for Jet Airways rose 8.9 per cent, the same for JetLite rose 43.2 per cent.

Commenting on the turnaround, Group Chief Executive Nikos Kardassis said, "Fuel cost increase and depreciation of the rupee against the dollar weighed heavily on the industry's profitability.

"In fact, ATF price rose by 13 per cent in the quarter y-o-y, against a rise of just 3 per cent in the previous quarter. Overall the fuel cost rose 25.8 per cent to Rs 1,967.4 crore from Rs 1,563.7 crore."

He further said though crude has fallen from the highs of $120 a barrel and now range between $100-105, benefits of the same have not accrued due to the fall of the rupee, which dipped from 44.70 in Q1 of FY12 to 55.615 in Q1 of FY13, a loss of around 24.4 per cent, putting pressure on our dollar-denominated costs.

"Going forward, we do not expect any major capacity increase given the delivery schedules of airlines in the sector," Kardassis said.

The markets reacted positively and shares of Jet Airways closed higher by 0.69 per cent at Rs 374.05. The company scrip had touched intra-day high of Rs 388.60.

System-wide ASKM (average seat per km) rose by 10.4 per cent to Rs 1,028.5 crore, while system-wide RPKM (revenue per km) rose by 16.3 per cent to 850.2 crore.

The system-wide seat factor jumped to 82.7 per cent against 78.5 per cent. Profit before tax stood at Rs 33.3 crore against a loss of Rs 156.8 crore.

The airline's low-cost arm JetLite reported a minor dip in seat factor at 79.3 percent in Q1 against 80.1 percent a year ago, though a total revenue jumped a healthy 30.3 percent to Rs 563.2 crore from Rs 432.1 crore.

Its profit after tax stood at Rs 11.7 crore versus a loss of Rs 5.3 crore in the comparable period last fiscal.

The Naresh Goyal-promoted airline said the operating environment was impacted by a severely depreciating rupee, ever-escalating aviation turbine fuel prices and higher charges by Delhi airport, which spiked operating costs.

However, yield improvement coupled with increase in demand and stringent cost control measures has helped the group to post profit after tax.

The period saw an increase of around 13 percent in fuel rates y-oy, which already had a high base last year.

The result also includes Rs 170.3 crore on account of foreign exchange translation losses with a realised forex loss of Rs 116 crore and an unrealised forex loss of Rs 54.3 crore, impacting the overall numbers.

The Group continued to maintain its leadership position in the industry with a market share of 27.9 percent as of end June.

Domestic operations accounted for 44 percent of total revenues Rs 2,067.7 crore, which grew 33.7 per cent y-o-y, as revenue per km rose 10 percent against 8.6 per cent. Domestic traffic for the Group grew 10 per cent, while for the industry grew by 1 per cent.

Domestic passenger load factors stood at 76.2 per cent and capacity in terms of ASKMs was 3,705 million up 15.2 per cent.

Its international operations accounted for 56 per cent of total revenues Rs 2,643.9 crore, a growth of 29.8 per cent on account of strengthening yields, on the back of a 21.2 per cent growth in the RPKM.

"We achieved seat factor of 86.3 per cent, up form 80.5 per cent a year ago, resulting in an Ebitdar margin of 17 per cent against 11.2 per cent. Its international traffic grew by 20.4 per cent," chief executive Kardassis said.

He further warned that "high crude prices, falling rupee and the overall slowdown will impact operating margins in the short-term. Imposition of higher user charges and levies at the Delhi T3 airport will lead to airline passing on the costs to passengers, which in turn may affect the passenger growth and/or ability of the airline to increase fares."

Kardassis also said the company will strengthen the balance sheet by bringing down the debt burden by around $400 million during the financial year through various initiatives. On such step was sale/sale and lease back of two aircraft and two engines in Q1.

Another step is completing the transactions for another 8-9 narrow-body aircraft, which will also help cut debt. Another measure is to double the income from ancillary revenues over the next two quarter, Kardassis added.


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