Jet Airways posts Rs 226 crore profit in June quarter

Fuel price benefit, revenue increase and exceptional gain of Rs 128 crore put airline on profit track

Jet Airways posted a consolidated profit of Rs 226 crore in the June quarter, driven by lower fuel costs, higher revenues and an exceptional gain (receivables from lessors) of Rs 128 crore. In the comparable quarter last year, it had posted a consolidated loss of Rs 258 crore.

Sales grew 11 per cent year-on-year to Rs 5,658 crore in the June quarter, as the airline carried a higher number of passengers than the previous year. It carried 6.29 million passengers in the June quarter, which is an increase of 21.3 per cent against the same period last year.

Even though a decline in jet fuel prices resulted in improvement in unit costs, yields continued to remain under pressure. Fuel expenses, on a standalone basis, saw a decline of 20 per cent year-on-year to Rs 1,444 crore. On Friday, its shares surged as much as 8.6 per cent to Rs 403.25.

In the June quarter, operating profit stood at Rs 162 crore compared to a loss of Rs 117 crore in the same period last year. Expenses on sales and distribution, aircraft maintenance, lease rent and salaries were higher.

High operational cost and growing competition had an impact on Jet Airways as it has not made an annual profit since 2007. "Our performance in the first quarter of this financial year demonstrates once again that the measures we are taking to bring the business back to profitability are having the desired result,” Jet Airways chairman Naresh Goyal said.
 

The airline had outlined a three-year turnaround plan at the beginning of 2014-15 to swing back to profitability and the airline said on Friday the results show their plan is “gaining momentum”.

Acting chief financial officer Ravinchandar Narayan said termed news reports regarding Etihad raising stake in the airline as “speculative”. Etihad Airways has 24 per cent stake in Jet Airways.

The combined passenger load factor in the first quarter of this financial year increased to 82.4 per cent, compared to 80.2 per cent in the correspondint period last yaer.

"Despite the increasingly competitive domestic landscape driven by aggressive new market entrants, our market share in India went up by 1.1 percentage points to 21.9 per cent. This means that one in every five domestic passengers flew on Jet Airways," said Cramer Ball, Jet Airways' Chief Executive Officer (CEO).

The second largest airline in the country, in terms of market share, Jet Airways also recorded 12.4 per cent growth in international passenger traffic during the first quarter.

Experts said this is the beginning of a turnaround for the airline.

"First quarter performance suggests beginning of turnaround - though domestic business continues to be challenging and under stress even with significant reduction in ATF costs and high growth rates but international story is getting robust and will be key to overall turnaround efforts," said Kapil Kaul, CEO South Asia, CAPA.

In another development, James Hogan, President and CEO of Etihad Airways has been nominated as the vice-chairman of Jet Airways.