Air India registers a profit in December

Lower jet fuel price, revenue growth help results

Decline in aviation turbine fuel price and 6.5 per cent growth in revenue helped Air India register a net profit of Rs 14.6 crore last month – its first profitable month in the current financial year. The airline had a made a loss of Rs 168 crore in Decmeber 2013.

“Our passenger revenue grew 13.5 per cent to Rs 1,563 crore and total revenue growth was 6.5 per cent. We have been able to register profit in December because of lower fuel prices and strong revenue growth,'' said an Air India spokesperson.
 

Air India does not disclose results each quarter like its listed peers and did not share total expenses.  The profit was recorded at a standalone basis and does not include results of its ground handling and engineering subsidiaries.

The carrier flew 1.61 million passengers across network a growth of 17.5%. Joining Star Alliance has also helped the airline and transfer passengers increased by 33% at Delhi, Mumbai and also in London and the US. The airline reported an earning before interest tax and depreciation of Rs 484 crore last month in comparison to Rs 308 crore in same month of 2013.  

It estimates a standalone revenue to reach Rs 21,500 crore and consolidated revenue to reach Rs 25,000 crore.

Between October and December last year, domestic jet fuel prices declined 11%. In January the jet fuel price was cut by 12.5%.

Fuel costs account for about 40% of an airline’s operating expenses. Domestic airlines pay more for fuel than their regional peers, owing to state and central levies.

For airlines, hit hard by high fuel costs for much of 2013 and the first part of last year, the drop in jet fuel prices will mean lower operating costs. Last financial year, domestic airlines together posted a loss of about Rs 9,700 crore. Air India made a net  loss of about Rs 5400 crore last fiscal.