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Loss figures don’t fly

Accounting engineering may have helped Deccan Aviation Ltd, operator of budget carrier Air Deccan, to show a 61% reduction in losses in its first quarter ended September 30 on a sequential basis.

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BANGALORE: Accounting engineering may have helped Deccan Aviation Ltd, operator of budget carrier Air Deccan, to show a 61% reduction in losses in its first quarter ended September 30 on a sequential basis. But if the Rs 129 crore ($28 million) income earned from the funds raised from two European banks is taken into account, then its losses are up by 55%.

The airline operator has shown the first tranche of term loan raised through a special purpose company (SPC) by pledging rights to take delivery of 60 aircraft (Airbus) as profit in its books. This has brought down its losses to Rs 43 crore as against the fourth-quarter ended June 30 losses of Rs 110 crore (figures of the last year’s first quarter have not been published).

Its turnover for the same quarter is up 186% to Rs 536 crore from Rs 188 crore (unpublished figure) in the corresponding quarter last year.

Deccan Aviation Ltd chief revenue officer Mohan Kumar says losses shot up during the quarter because of lower load factor, higher operating costs (mainly jet fuel and personnel cost) and intense price war. “For the airline industry, July and August are the worst period. During this period, load factors go down by around 8%. Though, we did register Rs 350 to R450 higher revenue per passenger in the period,” informed Kumar.

The airline is expecting yields to get better in the coming months with lower (ATF) cost, route rationalisation and better pricing regime.

“There is some maturity in pricing as far as the industry is concerned. It is very important that people should be sensible in fixing fares. There are customers at these prices too,” says Kumar.

Of late, the airline has been operating combination flights on various routes with lower loads to avoid unnecessary cash burn. “We are not withdrawing flights but combining them, so that there is better utilisation of capacity,” he says.

Kumar is expecting most new routes to start making profits in the next 9-12 months.

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