Jet Airways’ net loss for the June quarter widened to Rs 123 crore, compared to Rs 3.5 crore last year, as fuel costs rose 57%. The loss was lower than analyst estimates, as the company showed Rs 118 crore as receivable from its maintenance vendor. But for this accounting entry, the net loss would have been much higher at Rs 241 crore.
On a standalone basis, the company’s quarterly revenues rose 18.5% year-on-year to Rs 3524 crore. Jet said passenger yields could not be improved beyond a point due to the ongoing price war in the industry. The company tried to improve yields by withdrawing discounts, but that reduced demand.
The company warned that high fuel price and price war would continue in the current quarter too.
“International crude prices continue to be around $100 per barrel and will impact Q2 numbers as well. Pricing activities by competition continues and this will put pressure on yields in what already is the weakest quarter of the year,” the company said in its outlook statement.
Yet, the company’s share rose 3% on Friday to close at Rs 500. Dealers tracking the stock attributed it to short covering of positions.
To see the company’s detailed press release, click here:
Jet’s dismal Q1 performance did not come as a surprise to analysts who had predicted a net loss varying between Rs 200-Rs 300 crore.
An analyst attributes the losses to irrational pricing in the industry. “In January-February, Air India slashed its fares more then 30%. This, put pressure on Jet to also sell below cost which put tremendous pressure on its yields,”
said an analyst who did not want to be named.
It is not just high fuel cost that is eroding the company’s margins; the ongoing court case with Sahara is also a cause for concern. Till the issue is resolved, the company cannot develop its property at Bandra Kurla Complex and cannot do a sale-and-leaseback transaction of a few aircraft to improve cash flows.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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