Jet Airways 3Q profit highest ever
Jet Airways (India) Ltd reported third consecutive profitable quarter in a row and posted highest ever quarterly profit as the country's second largest airline by passengers carried benefited from lower fuel prices, higher traffic and increased aircraft utilisation.
The airline's profit soared by more than 7 times at Rs.467.11 crore in the three months ended December, compared with a profit of Rs.63.11 crore in the year-ago quarter. The record profit was notched up on a 7.77% increase in sales to Rs.5,443.97 crore from Rs.5,051.02 crore a year ago.
The Mumbai-based airline beat the street estimates. Jet Airways had been expected to post a net profit of Rs.334.40 crore on net sales of Rs.5,668.90 crore, according to a survey of analysts by Bloomberg. The December quarter is also the peak season for airlines because of travel during festivals and year-end holidays.
To add, in 2015, the price of benchmark Brent crude oil fell 35%, while in 2014, it fell 48.3%. In India, fuel costs account for about 45-55% of the revenue of domestic airlines, and a 4% drop in fuel cost adds around two percentage points to the operating margin of airlines. However, on 20 January, Brent crude hit a more than 12-year-low of $27.1 a barrel, but since then jumped over 30%.
"Jet Airways is rightly placed to participate in the fast growth in India's aviation sector driven by the country's strong economic fundamentals. As a network carrier we are committed to connect India to the world with our full service product, providing greater choice and world class travel experience to guests," said Naresh Goyal, chairman, Jet Airways.
"The record profit and overall strong financial performance in this fiscal is a result of several initiatives undertaken for improving productivity and efficiency," the founder chairman said. The Ebitda (earnings before interest, tax, depreciation and amortisation) quadrupled to Rs.751 crore for the quarter and increased more than ten-fold to Rs.1,496 crore for 9M FY16, the airline said in a statement.
The growth in passengers flown and the increased aircraft utilization led to increase in available seat kilometre (ASKM), which helped in improving both operating and financial performance in the third quarter.
Jet Airways group was able to generate higher passenger traffic compared to capacity deployment. Domestic capacity grew by 14.6% in the third quarter while passenger traffic grew 15%. In the international business, capacity grew by 2.6% while growth in passenger traffic was 5.1%. The airline said an in-depth focus on cost reduction initiatives has resulted in the non-fuel cost per ASK (available seat miles) being lowered by 4.6% in the quarter while total cost per ASK was reduced by 15%.
James Hogan, vice chairman Jet Airways and president and chief executive officer, Etihad Airways, said "We are very satisfied with the operating and financial performance of Jet Airways that has resulted in record profits. We remain committed to providing solid support and driving further synergies between the two partners." Overall codeshare traffic witnessed growth of 28% from 416,816 passengers carried to 534,104 passengers in the quarter, with codeshare traffic with strategic alliance partner Etihad Airways and its partner airlines growing by 86%.
Jet Airways, together with Etihad Airways, now has the largest market share in Indian international traffic. Cramer Ball, chief executive officer, Jet Airways, said: "Our strong operational performance resulting in record profit demonstrates the progress we continue to make in our turnaround plan. The key achievements during Q3 have been lower cost per ASK excluding fuel and higher aircraft utilization resulting in additional capacity equivalent of nine 737 aircraft without any addition to the fleet."
Rival airline InterGlobe Aviation Ltd, the owner of India's largest and most profitable airline IndiGo, posted a 24% increase in third-quarter profit. InterGlobe Aviation, in its first earning announcement since its stock-market listing in December, said net profit rose to Rs.657.28 crore for the three months ended 31 December from Rs.531.56 crore in the year-ago period, beating analysts' estimates. IndiGo also reported the highest quarterly profit before tax since its inception.