Jet surprises with lower loss; pricing pressure hurts

India’s largest private airliner, Jet Airways, on Friday surprised the markets by posting a much lower loss than expected on better revenue and a one-time gain, but the carrier cautioned high fuel and intense competition hurt performance.

The Mumbai-based airline reported a first quarter net loss of Rs123 crore compared with a Reuters poll of brokerages that had expected Jet to report a quarterly net loss of Rs239 crore.

In the comparable year-ago quarter it had a net profit of Rs3.52 crore. Its April-June total income rose to Rs3,540 crore from Rs2,965 crore.

“They have been doing well in terms of topline growth. What they have been witnessing has been a pressure on yields as well as pressure on fuel cost,” said Mahantesh Sabarad, sector analyst at Fortune Equity Brokers.

Shares in Jet, valued at about $947 million, closed up 2.38% at Rs499.45 in a firm Mumbai market.

“The domestic operating environment continued to be challenging in Q1 largely due to competitive pricing activities,” the airline said in a statement.

“In May and June, pricing in the market was impacted due to two big carriers dropping fare levels below costs, which eventually led to lower market fares.” Jet’s fuel expenses for the quarter jumped 57% to Rs1,560 crore.

International crude oil prices continue to be in the $100 per barrel levels and will continue to hurt, Jet said.

Its total expenditure, which includes employee costs and depreciation rose about 31% to Rs3,640 crore. “The second quarter will be under pressure because it is a lean season in the domestic market,” said M Shivkumar, senior vice president, finance, Jet Airways. Jet has a debt of about Rs13,370 crore and expects to repay Rs1,800 crore this year, Shivkumar
said. Reuters