Jet Air­ways 3Q profit high­est ever

The Pak Banker - - COMPANIES/BOSS -

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.

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