India’s Jet Airways posts $19.8m third quarter loss

This story is sourced from Pro
See more Pro news »

Indian carrier Jet Airways has issued a warning on its profitability and said that restructuring efforts, including slashing routes and the sale and leaseback of aircraft, are vital to turn around its fortunes.

The airline endured a torrid financial third quarter, making a pre-tax loss of Rs1.01 billion ($19.8 million) on revenue of Rs37 billion in the period to 31 December 2011. In the same quarter a year earlier it made a profit of Rs2.1 billion on revenue of Rs33 billion.

In a stock exchange statement the carrier said: "The management is actively pursuing various options to improve the operating results and cash flows through the sale and leaseback of aircraft, route rationalisation and cost control measures.

"The company continues to explore options to raise finances to meet its various short term and long term obligations - including support to its subsidiary, Jet Lite (India)."

As at 31 December it had an investment of Rs16 billion in Jet Lite and had loaned its loss-making subsidiary an interest free sum of Rs14 billion. However, the statement adds: "As at the end of the current quarter, although the subsidiary has reported net losses and has an eroded net worth, the operating revenue of the subsidiary has started showing a rise which is likely to improve further."

During the period it earned Rs760 million from the sale and leaseback of engines, it said.

Jet Airways blamed its woes on the rising cost of fuel - which it said surged by 59.9% to Rs17.5 billion in the quarter - and falling fares.

Total operating costs for the quarter jumped 42.3% to Rs12 billion, compared with Rs8.4 billion for the same period last year.

Nikos Kardassis, chief executive of Jet Airways, said: "High fuel prices together with depreciating rupee against the dollar have pulled down the operating results to an extent; however yield improvements due to seasonality and narrowing gap between demand supply imbalances have helped the airlines to post operating profits."

It saw pre-tax losses for the first nine months of the year rise to Rs9.71 billion, against Rs2.3 billion in the previous year.