Lower revenue, exceptional items drag Jet books in Q4

Jet Airways (India) Ltd's domestic operations contributed to a bulk of its Rs 743 crore consolidated loss for the fourth quarter, whereas its international business made a profit. Yield increased 16 per cent, but all other operating parameters - departures, capacity, passengers flown and load factor - showed a decline, the airline said in its investor presentation.

The unit cost, which measure the cost to fly a seat over a kilometre, was 32 per cent higher and the break-even seat factor in percentage terms worsened to 103 per cent on a year-on-year basis.

This means the airline was unable to recover the cost even if its flights were full. The average load factor for Jet was 81 percent.

Domestic operations account for about 40 percent of the carrier's stand-alone revenue, but made a pre-tax loss of Rs 741 crore in the March quarter against Rs 178 crore loss in corresponding period last year. The airline's subsidiary, JetKonnect (JetLite), made a loss of Rs 348 crore in the fourth quarter against Rs 56 crore loss a year ago. Revenue from domestic operations, too, was lower by almost 10 per cent.

The saving grace was the Rs 238 crore profit came from Jet's international operations, which saw a marked improvement. Since the fourth quarter of FY2012, when the international operations of Jet had made a huge loss, the airline has cut down on loss making routes such as New York, Milan and Johannesburg and redeployed some of its domestic capacity on short haul international routes.

An important reason for the 109 per cent increase in the consolidated loss was the number of exceptional items and one-off costs amounting to $127 million (Rs 706 crore today). This included aircraft overhaul costs, salary arrears, reversal of duty credit, professional charges, loss due to exchange rate fluctuation, cost related to redelivery of aircraft and cost of aircraft on ground. This wiped out all gains from the sale and lease back of the London Heathrow slots and compensation from Boeing for delay in delivering Boeing 787 planes.

The airline also made a provision of $5.4 million in its account books due to default by Delhi-based Spring Travels. The travel agent defaulted over Rs 120 crore, which was due to be paid to airlines in March and a large chunk of it was to Jet.

Acting chief executive Hameed Ali said: "The sluggish economic scenario and high yields have resulted in a decrease in market demand and capacity. Rupee depreciation, high fuel prices, an increase in landing and navigation costs and an increase in cost of operations, including the impact of one-time costs and aircraft on the ground, impacted the quarterly results."

Last year, there were two rounds of fare rises and the airline saw a yield growth of 25 per cent. Though the demand for air travel was slow because of an increase in fares, the airline expects it to rise 10-12 per cent on account of capacity moderation.