Loss due to rise in fuel prices, weak rupee & intense competition
Mumbai-based low-cost carrier GoAir slipped into losses during fiscal 2011-12 after a profitable 2010-11, but the airline believes it can reach break-even to total cost in 2012-13 because of an improvement in average fare trends.
The Wadia Group-owned airline made a net loss of R133.72 crore compared with a net profit of R60.05 crore in 2010-11, according to the company’s annual report. The carrier plunged into a loss due to increasing fuel prices, a weak rupee and intense competition which lowered average fares across airlines.
“Additional cost borne by the company due to fuel, net of incremental activity, amounted to R218 crore,” the GoAir management said in the company’s annual report. “Weakness of the rupee impacted mainly lease rentals and maintenance reserves with an additional negative contribution of Rs 16 crore in the fiscal 2011-12.”
GoAir’s net loss came despite a 16% increase in net sales to R1,461.1 crore in 2011-12 compared with R1,260.67 crore in the previous fiscal.
The fiscal 2011-12 was a particularly bad year for Indian airlines with every airline apart from IndiGo posting a heavy loss after tax. The three BSE-listed airlines SpiceJet, Jet Airways and Kingfisher Airlines had a combined net loss of R4,169.88 crore in 2011-12. India’s largest passenger carrier IndiGo also had a operational loss of R87.7 crore but deffered tax assets helped the airline post a profit after tax of R127.8 crore.
However, an improvement in average fares after the floundering of Kingfisher Airlines has improved the atmosphere somewhat. SpiceJet and Jet Airways reported net profits in the first quarter of 2012-13 fiscal. GoAir’s management also said that the first quarter was profitable.
“At the end of the fiscal 2011-12, a new and stronger trend in average fares has allowed a significant increase in passenger revenues to the company to deliver profitable results for the first quarter ended June 2012,” the GoAir management said in the annual report.
“Provided that fuel cost does not increase further from R66,000 per kilolitre and the exchange rate does not fall below R54.50, the management