Jet Airways Q1 profit at Rs 143 cr, goes for new accounting method

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Mumbai, Jul 29: Private carrier Jet Airways India Ltd has posted a net profit increase of 343% at Rs 143.40 crore for the quarter ended June 30, 2008 as compared to Rs 30.88 crore in the corresponding quarter during the last fiscal. Sales stood at Rs 2,899.20 crore, up 46% as compared to Rs 1,983.20 crore in the last fiscal.

Despite record high fuel prices during the quarter, the company managed to post a net profit thanks to a change in its accounting policy for charging depreciation on its narrow body aircraft used for the domestic operations.

"We will now charge depreciation on a straight line method (SLM) as compared to written down value (WDV) basis. This method is in line with the method that we follow to depreciate our wide body aircraft that we use for international operations."

Meanwhile, the shares of the company dipped 1.80% to close at Rs 439.95 on the Bombay Stock Exchange on Tuesday.

An analyst from a Mumbai-based broking firm explained, "The company has changed it accounting policy for depreciation on an SLM as compared to a written down value (WDV) basis. Under the SLM, the percentage of depreciation is comparatively lower compared to WDV, resulting in profits."

However, a press statement issued by the airlines states that the impact of the new accounting policy is Rs 915.90 crore. The analyst added that if the company had not adopted this policy, it would have posted losses to the tune of Rs 773 crore (Rs 915.90 crore - Rs 143.40 crore)

The press statement also states that the results for the quarter are largely impacted by record high fuel prices, which peaked close to $140 per barrel in June. It may be recalled that in the corresponding quarter in the previous fiscal, fuel prices were hovering anywhere between $70-80 a barrel.

The outlook for the second quarter is traditionally a low season but reduction in capacities and increases in fares/surcharges will improve the situation to a larger extent.