Jet Airways, the country?s largest private carrier, has reported a net loss of Rs 225 crore for the first quarter ended June 30, 2009, compared to a net profit of Rs 143 crore in the corresponding quarter a year ago. The results, however, did not surprise analysts, since a negative performance was expected from the carrier, as the aviation industry continues to grapple with dipping passenger traffic and over capacity.
The airline’s sales slipped 26% for the quarter at Rs 2,085 crore as against Rs 2,831 crore a year ago, on the back of declining load factors. The company said that in view of the seasonality of the business, the financial results for the quarter were not indicative of the full year’s performance. Jet Airways’ shares rose marginally to close at Rs 247 on the Bombay Stock Exchange on Friday. The results came in after market hours.
Meanwhile, the board has approved raising of an additional capital of $400 million, subject to necessary approvals. The company, in the past, postponed its fund raising exercise several times owing to unfavorable market conditions.
Fuel expense for the quarter dipped at Rs 637 crore as against Rs 1,539 crore. Even employee remuneration and benefits have marginally come down to Rs 328 crore from Rs 355 crore. Yet, the airline has posted losses in the quarter, mainly on account of lower yields arising out of intense competition and over capacity in the market, besides high interest costs.
“High interest rates and depreciation costs have eaten into the bottom line of the company,” said an analyst from a brokerage firm. Interest costs during the quarter rose to Rs 243.60 crore as against Rs 134. 62 crore. The depreciation amount also increased to Rs 246 crore as against Rs 198 crore.
The company had adopted a change in the method of calculating depreciation that allowed it to show a profit of around Rs 143.38 crore for the first quarter of FY09. Jet had changed the depreciation calculus from the written down value method to the straight line method with retrospective effect.
On the positive front, the company continues to implement cost control measures and rationalisation of routes to be able to compete in a dynamic environment. These measures will help arrest losses in future.
The aviation sector has been raking up losses as carriers struggle with intense fare competition, poor infrastructure and congestion resulting in flight delays and one-off factors like unilateral tax regime in different sectors.