Jet Air Profit Plunges in Q3 on Rising Fuel Prices
Mumbai: Jet Airways on Friday said its consolidated quarterly net profit plunged by a third, hurt by weak revenue growth and rising fuel prices.
Jet's earnings decline indicate that India's airlines will find it difficult to sustain their profitability, barely a year after they came out of a long spate of losses.
Jet, India's second biggest airline by market share, posted a consolidated net profit of ₹ 156.3 crore for the October-December quarter, compared to ₹ 467.1 crore, a year earlier. Total revenue rose just 0.9% to ₹ 5,932.9 crore.
The consolidated numbers include those of the full service carrier and its subsidiary JetLite. Jet's Oct-Dec FY16 performance had been its best ever.
Jet's profit before tax for Q3 FY17, plummeted 91% to ₹ 44.3 crore whi- le the airline's fuel costs for the quarter rose 17% to ₹ 1,545.8 crore. Its staff also costs grew 23% to ₹ 747.7 crore.
Jet's net profit was propped up by a 51% rise in its other income, which included profit from sale and leaseback of planes, to ₹ 290.40 crore. A long-standing tendency to sell below costs for filling up planes, coupled with a more recent crawlup of fuel prices have dented airlines' margins. Earlier this week, IndiGo posted a 25.1% decline in its net profit to ₹ 486.5 crore.
Cost of jet fuel at the Delhi airport--India's busiest-- rose 8% in November compared to October, then declined a tad in December before rising again in January. On Feb 1, were increased by 3%, going beyond the levels of 2015, when prices had started falling, leading to a turnaround in fortunes for the airline industry. Jet fuel is the biggest operating cost chunk for an Indian carrier.