Five-day strike by pilots also cost the airline about Rs 80 crore
Jet Airways, India's largest private airline, reported net losses of Rs 406.69 crore for the second quarter ended September 20, down nearly 6 per cent from the same quarter last year. The loss was mainly because of lower yield per seat following Jet's decision to shift over half of its capacity to its low-cost service. The shift of capacity to low-cost arm Jet Konnect was executed in May this year. Jet Konnect fares are at least 25 per cent cheaper than full-service fares and a high load factor of 77 per cent did not offset the lower yield per passenger from cheaper fares.
The airline’s revenues fell 26.9 per cent for the second quarter to Rs 2,380.97 crore compared with Rs 3,258.45 crore in the same quarter last year. The fall has been steeper in domestic operations — 43.2 per cent to Rs 831 crore against a 26.3 per cent fall to Rs 1,188 crore in international operations. A five-day strike by pilots also cost the airlines about Rs 80 crore in lost revenue.
Last year, the share of domestic revenues in the total revenue fell to 38 per cent from 46.8 per cent in the second quarter and international revenue's share had increased to 62 per cent from 53 per cent during the same period. The biggest challenge for the company is its burgeoning debt burden which hit $3.1 billion (Rs 14,500 crore) this quarter and could be a cause of worry. In addition, the airline is forking out Rs 236 crore in interest and finance costs in the reporting quarter — an increase of 51 per cent over the same quarter in the last year (Rs 156 crore)
To retire some of its debt, the company has applied to the Foreign Investment Promotion Board to raise up to $400 million in equity through qualified institutional investors. The company is also looking at selling prime commercial property in Bandra-Kurla Complex, Mumbai, which is expected to fetch around Rs 1,000 crore.
The company's outlook for the coming quarter is, however, positive.
"Domestic air traffic appears to have started reviving in the last few months. This, along with the peak season impact in third quarter, will help airlines improve yields, which otherwise had been severely impacted by the slowdown and lean season impact," an airline press release said.
Jet Airways Executive Director Saroj Datta said yields would increase by 3-5 per cent in the coming quarter, which would help in improving margins. Other executives also pointed out that, over the last few weeks, airlines raised fares and these increases had not shown any negative impact on traffic — yet another sign of better times. Analysts also said that, if the extraordinary items are removed, the results are better than the corresponding quarter last year. The Ebitdar (earnings before interest, taxes, depreciation, amortisation and rent), which refers to the company's operating status, had turned positive. The management was also hopeful that the international operations would break even soon.
"On international routes, we were able to achieve a seat factor of close to 80 per cent and are close to breaking even, despite difficult market conditions," the release said. Meanwhile, Jet Lite, the fully-owned low-cost subsidiary of Jet Airways, reported that its losses fell 53.8 per cent in the second quarter of the financial year to Rs 126 crore from Rs 273 crore during the same quarter last year.
