Jet may pare losses for the December quarter

After suffering losses for two consecutive quarters in this fiscal, the country?s largest private air-carrier Jet Airways finally may have some reason to rejoice. According to two broking firms, Jet will either post a marginal profit or manage to pare losses in the third quarter compared to last two quarters on the back of better load factors and stable aviation turbine fuel (ATF) prices.

Jet had posted a net loss of Rs 225 crore in the first quarter of FY10 and Rs 406 crore loss in the September quarter.

Centrum Broking Ltd?s Mahantesh Sabarad said, ?In the backdrop of improved passenger traffic since September and stable ATF cost, Jet will be able to post a profit of Rs 14 crore as against Rs 214 crore in the December quarter of 2009.? He further said due to improved traffic sequentially from September, there will be 31% increase in revenues to Rs 3,040 crore for the quarter under preview compared to the September quarter.

Jet, while announcing the second quarter results of 2009-10, had said the five-day strike in the second business quarter, between September 5 and 12, alone had resulted a loss of Rs 80 crore. During that period, the airline had to cancel approximately 1,300 domestic and 200 international flights.

However, the airline has reported a growth of 53% in domestic and 28% in international passenger traffic in December, as compared to the same period in 2008. The average seat factor for Jet?s international operations in December stood at 84.9%. The carrier also had a market share of 26.5% for December to emerge as the largest player in the domestic market, according to Directorate General of Civil Aviation (DGCA) data released recently.

Jet had fine-tuned its business strategies in May 2009 by moving two-thirds of its capacity to its newly introduced service called JetKonnect, which offered seats at 15% lower fares than Jet.

In the 17th annual general meeting of the company in August last year, Naresh Goyal, chairman, Jet Airways, had said, ?The creation of JetKonnect has enabled us to respond quickly to the changing market conditions. Of our 265 flights per day, we operate 127 flights under this brand. The strategy of switching a select number of our full service flights to JetKonnect has enabled us to increase the amount of revenues per flight between 5% and 10%.?

Jet had to introduce JetKonnect since it had witnessed a general slowdown in traffic, both corporate and leisure like its competitors in December quarter of FY09, due to the terror attacks in Mumbai. Collectively, airlines had witnessed an 18% decline in traffic during that quarter.

However, an report prepared by IDFC-SSKI Securities Ltd states that Jet will post losses of Rs 130 crore as against Rs 500 crore loss which it incurred in September quarter of FY10 and loss of Rs 230 crore which it incurred in December quarter of FY09. ?With passenger traffic returning into the system and yields 15% higher than last quarter, the macro-economic environment is turning favourable for aviation.?

The report further stated that Jet had reported a consolidated gross debt at $3.1 billion (Rs 14,570 crore) of which $2.2 billion (Rs 10,340 crore is aircraft debt) in September quarter of FY10. The current payment obligations stand at $330million (Rs 1, 551 crore). While Jet has got approval to raise $400 million (Rs1,880 crore) of funds.