The Hindu Business Line : Jet’s losses pile up to Rs 407 cr in Q2

Jet Airways sank deeper into the red with a net loss of Rs 407 crore for the quarter ended September 30, a result of falling average yields due to low fares, coupled with the impact of the lean season. The airline reported a loss of Rs 384.5 rore in the corresponding previous period and Rs 225 crore in the preceding, April-June, quarter.

The management believes that domestic air traffic has begun to show signs of recovery in this quarter with a growth of 24 per cent over the corresponding period last year.

Jet also expects yield improvements on global routes in the third quarter which is the peak season. It is also hopeful that premium demand will revive during the year.

The airline increased domestic capacity by 2.5 per cent in the second quarter ( compared with the first quarter) thanks to the transition from a full service offering to the more basic Jet Airways Konnect. It is here that Jet is bullish since Konnect has helped it improve seat factors and overall revenues in the domestic market.

However, the full impact of this conversion will be seen in the third quarter since the five-day pilots’ stir last month played spoilsport. Jet lost Rs 80 crore revenue in that period and saw cancellations of nearly 1,300 domestic and 200 international flights.

JetLite performance

In a communiqué to the BSE, the company has said that JetLite’s “financial statements have been prepared on a ‘going concern’ basis and no provision is considered necessary in respect of the investments and loans outstanding from the said subsidiary. The net worth is fully eroded due to the losses incurred by it.”

The company has equity and preference investments totalling Rs 1,645 crore in JetLite (Jet’s no-frills arm) and Rs 641 crore interest-free loan.

However, the management said in a conference call that Jet would continue to support JetLite’s operations and expects it to turn around. Of its 480 daily flights, Jet accounts for 235 (including international), Konnect over 130 flights, while JetLite operates an average of 115 flights.

Seat factor

Domestic operations contributed 38 per cent to overall revenues in Q2. The seat factor was 69.8 per cent, up from 66.9 per cent last year. The seat factor on overseas routes was higher at 80.6 per cent (66 per cent) thanks to capacity rationalisation and focus on profit-making routes.

Jet is also awaiting FIPB approval to raise up to $400 million to meet its working capital needs. The combined debt of Jet and JetLite is Rs 16,850 crore with cash reserves of Rs 1,297 crore. The airline operates on a 4:1 debt-equity ratio.

The Jet scrip fell 9.05 per cent to close at Rs 365.80 on Tuesday.