Jet Air lands in the black

CORPORATE SCORECARD

Bolstered by other income from forex gains as a result of the rupee appreciation, Jet Airways has posted a net profit of Rs 30.88 crore for the quarter ended June 30, while it posted a net loss of Rs 44.98 crore for the quarter ended June 30, 2006.

Total income from operations grew by 19.80 per cent at Rs 1,983.03 crore (Rs 1,655.19 crore).

Other income Jumped to Rs 176.36 crore (Rs 32.22 crore) in the first quarter. Jet Airways has taken $800 million foreign currency loan, which is being used to finance its aircraft acquisition. With the rupee appreciating, the repayable amount will be much lower. The forex gain is added to profit and loss account as per the new directive of the government.

Amitabh Chakraborthy, president-equity, Religare Securities, said the airline's performance was reasonably in line with expectations. "Though Jet has managed to protect its yield, the gradual erosion of load factor to rivals for the international and domestic sectors are cause for concern," he said.

Another leading industry analyst pointed out that other income has played critical role in lifting profitability from net loss during FY Q1 06.

Jet Airways Chief Executive Officer Wolfgang Prock-Schauer said better yield management on the domestic and international coupled with cost reduction measures have led to profitable operations. Prock-Schauer said though there was several one-time costs, the airline managed to reach break-even seat factor at 66.9 per cent (76 per cent).

The load factor for the domestic sector was 71 per cent 65 per cent for international sector.

"Fuel costs were lower by Rs 45.4 crore against the same period a year ago. This was largely due to low rates and the lower number of flights operated. The average fuel rate was lower at Rs 38.37 per litre against Rs 40.04 a year ago.

The impact of fuel and other surcharges fully mitigated the additional cost related to congestion during the quarter," a Jet executive said.

The expenditure on employee remuneration and benefits grew by 15 per cent to Rs 263.44 crore for the reporting quarter against Rs 229.08 crore. Other operating expenses shot up by 20.70 per cent at Rs 506.08 crore (Rs 419.27 crore).

"At the company level, the average staff numbers increased from 8,744 to 10,820 on account of the expansion in operations. New hirings among pilots, engineers and cabin crew constituted the bulk of this increase. The increases in all other costs were in line with the increase in level of operations and in most instances even lower than that of the same period last year," Jet executives said.

On the outlook for the second quarter, K G Vishwanath, general manager (finance), said that with the July-September quarter being an off season combined with rise in fuel prices would impact operating costs.

"We have progressively increased fuel surcharges on both domestic and international routes, and will continue to do so to mitigate such fuel price increases. What remains to be seen is whether the market will continue to grow at the same pace given steep increases in surcharges on a regular basis. Currently, we have no reason to believe so," he added.

Meanwhile, the Jet Airways stock fell by 3.15 per cent on the Bombay Stock Exchange (BSE) to close at Rs 700 compared with its previous day's close of Rs 722.75.