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The earnings season has been led so far by companies that have benefited from the sharp fall in the rupee. The trend seems to be turning with the likes of Jet Airways reporting a massive loss of Rs 998 crore in the second quarter. A number of factors have come together during the quarter to hurt the company's revenues and profit. For starters, air turbine fuel (ATF) prices rose by 10 .5 per cent sequentially and eight per cent year-on-year (y-o-y). The rupee, too, wreaked havoc as it weakened 10 per cent during the quarter. These factors accentuated the company's financials in a seasonally weak quarter. Jet Airways reported one per cent y-o-y growth in its sales to Rs 4,607 crore and a consolidated loss of Rs 998 crore during the second quarter. Analysts say the market was expecting only a Rs 500-crore loss.
During the quarter, the number of passengers grew 12 per cent compared to the corresponding quarter last year and yields decreased, which hurt profitability. In its domestic operations, the firm's departures rose 8.8 per cent and passenger load factor increased 4.7 per cent y-o-y to 70.3 per cent. Despite the increase in load factor, domestic revenues fell two per cent y-o-y to Rs 1,618 crore during the quarter. Analysts say this is due to promotional schemes. Overall operating expenses rose 23.6 per cent y-o-y, while aircraft lease rentals increased 35 per cent.
The company has blamed its dismal performance on the lean season and economic slowdown. Increase in airport charges has further driven cost pressures resulting into losses. Plus, Jet said there have been instances of aircraft on ground, the impact of which was Rs 123 crore. These aircraft will be leased out in the next few months. International operations also saw gross revenues per passenger in dollars fall 24 per cent to $229.6, compared to the corresponding quarter last year. However, thanks to the rupee's fall, this fall was only 10 per cent in rupee terms.
Analysts expect the third quarter to be better, as it's a seasonally strong quarter. The currency has also stabilised. Besides, once the Competition Commission of India clears the deal with Etihad, Jet will see a fund infusion of Rs 3,000 crore. The company has revised fares upwards towards the end of the second quarter, which will also reflect in the coming quarters.
