Indian carriers' Q4 numbers boosted by non-core income

Jet Airways earned Rs 310 cr in other income as compared to Rs 165 cr in same period in FY16

Indian airlines’ numbers show dependence on non-core income.

Jet Airways reported a profit of Rs 23 crore for the December-March period. It was a steep fall from Rs 95 crore the previous year but analysts say the numbers would have been poorer without a steep jump of Rs 88 crore in other income. In the March quarter, Jet earned Rs 310 crore in other income, compared to Rs 165 crore in the same period of FY 16. 

Other income consisted of profit from sale and leaseback of planes, profit from land development and transfers from its frequent flyer programme.

The highest contributing factor was a land development agreement with Godrej Buildcon. “Frontloading of income from the agreement and full factoring of the proceeds of the slump sale is boosting the FY18 profit,” said Ansuman Deb of ICICI Securites.

“Remove other income and it’s a loss of Rs 275 crore,” said an analyst.

Market leader IndiGo’s numbers were also boosted by a steep jump in other income. Finance income, from fixed deposits and mutual funds, was Rs 177 crore. With the rupee strengthening against the dollar, the foreign exchange gain due to this, coupled with other non-operating income, amounted to around Rs 83 crore for IndiGo, an analyst saidpointed out. “Other income for IndiGo rose sharply by 59 per cent to Rs 293 crore, owing to a forex gain of Rs 82.6 crore,” noted Vishal Rampuria, an analyst with HDFC Securities. 

“Other income, finance costs, exceptional items, tax expenses, and extraordinary items reflect neither the strengths nor weaknesses of an airline’s operations and commercial strategy,” said an analyst.