Jet Airways loss widens to Rs 406 cr on lower yields

Written by fe Bureaus | Mumbai | Updated: Oct 28 2009, 06:02am hrs
Jet Airways net loss has widened 5.7% to Rs 406.6 crore for the quarter ended September 30, 2009, compared to a net loss of Rs 384.5 crore in the corresponding quarter of the previous financial year. This is on account of lower yields due to intense competition, over capacity in the market and high interest costs. Capacity in the market is more or less stable now (industry capacity grew just 5%. However, the airlines continued to offer low fares in Q2 which has led to a decline in average yields. This is lean season impact and typical of Q2 every year, said Saroj K.Datta, executive director, Jet Airways. The companys revenues also slipped 25.5% to Rs 2,325 crore in current quarter against Rs 3121.3 crore in the corresponding quarter last year.

Shares of the company closed at Rs 365.80, down by 9.05% on the Bombay Stock Exchange on Tuesday.

The results for the quarter were also impacted by the five days of pilots strike (September 8-12) which resulted in close to 1,300 domestic flights and 200 international flights being cancelled. This led to a loss of revenue to the tune of Rs 80 crore ($16 million). This, together with the fact that fuel cost increased 17.4% during this quarter compared to the April to June quarter had an additional cost impact of Rs 108.3 crore ($22.5 million), added Datta. However, he seemed confident of demand and yields per seat rising in the next six months.

Giovanni Bisignani, director general and CEO at IATA (International Air Transport Association), had earlier told FE that he expects losses from commercial airline operations worldwide in 2009 to each $11 billion and the losses of the industry would account for 11% of the global losses. Bisignani said, The beginning of an economic upturn is now visible, particularly in Asia, to the benefit of travel and freight volumes, yields are much weaker than anticipated and oil prices higher. He maintained that the worst is over, but recovery will be a long story.

Jet achieved a seat factor of 75% in the current quarter on Jet Airways Konnect (JAK), its single class no-frills service introduced from May 2009. As of date, the companys 27 aircraft (17 B737 and 10 ATR aircraft) which represents close to two-thirds of its capacity are being operated under Jet Airways Konnect brand.