Airlines margins nosedive

The airline paid Rs 1,491.18 crore in fuel costs during the quarter,up 50 per cent from Rs 994.21 crore a year ago,as oil companies continued to raise aviation fuel turbine or ATF prices on higher crude oil prices in the global market. Abnormally high fuel costs,a low fare scenario induced by demand supply imbalance,together with a depreciating rupee versus the dollar and fare cuts have all collectively impacted the second quarter performance, said Nikos Kardassis,chief executive.

Revenues for the airline grew 26.3 per cent during the quarter to Rs 3,293.54 crore from Rs 3,105.04 crore a year ago. It also carried 15.2 per cent more passengers during the quarter as compared to the same quarter last year. Earnings before interest,depreciation,taxes,amortisation and rent EBIDTAR was Rs 131 crore for the quarter and the ebidtar margins,3.6 per cent.

The companys RPKM or revenue from a passenger for every kilometer,grew by 9.2 per cent during the quarter as compared to the corresponding quarter last year. ASKM or available seats for every kilometer also grew by 8.7 per cent during the quarter as compared to the corresponding quarter last year.

While Jet Airways has no control over fuel costs,it is trying to trim its costs elsewhere,according to Kardassis. Stringent cost control managed by looking at contract renegotiations,process improvements and increased ancillary revenues are being looked at, he said.

The airline will also be doing a sale and leaseback of some our aircraft to repay existing high cost working capital loans, Kardassis added.

Commenting on the results,Sharan Lillaney,an analyst with Angel Broking said,Forex losses have added to the loss figure for Jet Airways. Otherwise,the market had expected the airline to make a loss of Rs 450-500 crore. However,notional forex losses should not be be too much of a concern,he added. Independent analyst and stock market investor,S P Tulsian said that the results were horrible. Fuel costs have risen too high and this situation is likely to continue for a while. That is the biggest concern for airlines right now, he said.

On the outlook for the industry,Jet Airways said,The traffic in the Indian domestic sector continues to grow in double digits. This along with the succeeding peak season will help airlines improve yields. Our international operations continue to achieve seat factor of around 80 per cent. We expect the yields to improve further on account of the peak season. Our Business and First class seat factors are holding and we should see further improvement going forward in Q3.

Jet Airways shares closed 2.16 per cent higher on the BSE on Friday,at Rs 265.35,compared to the previous days close. The results,however,were announced after market hours.