Five engines that helped Deccan Aviation post its first profit since its June 2006 IPO last year, in the quarter ended December 31, 2006.
MUMBAI: An extraordinary, non-aviation income of Rs 135 crore, doubling of peak season traffic, reduced “cost per unit” due to an increase in the scale of operations, lower jet fuel prices, and fuel and congestion surcharges.
These are the five engines that helped Deccan Aviation post its first profit since its June 2006 IPO last year, in the quarter ended December 31, 2006.
Without the non-aviation inflow, the airline would have posted a net loss of Rs 125.36 crore.
Deccan’s net profit stood at Rs 9.64 crore for the quarter.
The extraordinary gain came by way of a second tranche of $30 million accrued in the quarter following pledging of its right to buy 60 Airbus SAS planes to Investec Ltd and HSH Nordbank AG.
The total pledge value is $100 million, payable to Air Deccan in four tranches. The first tranche came in during the June-September 2006 quarter.
Mohan Kumar, director-finance of Deccan Aviation, believes the airline was finally reaping the benefits of economies of scale. The airline carried 1.65 million passengers compared with 837,184 a year earlier. Also, the airline increased seat capacity by 99% to 2.1 million from 1.09 million in the last one year. “We have been able to reduce our cost per seat kilometre by 17 paise over the last quarter. Our realisation has improved despite higher capacity. The market is absorbing the additional seats,” said Kumar.
Deccan upped fuel surcharges three times last year to Rs 750 per ticket. It also imposed an additional Rs 150 surcharge due to congestion at airports.
Earnings were also helped by an 18% decline in aviation turbine fuel prices - to Rs 45,530 per 1,000 litres in the past quarter. Kumar believes all Air Deccan flights are slowly turning profitable. “Today, of the 162 ATR flights, around 75-80 are profitable. 40 of the 132 Airbus flights, too, are in the green. We are expecting a majority of our Airbus flights to be profitable by the end of next fiscal,” he said.
Deccan expects to carry 8 million passengers this year, twice as many in 2006, Warwick Brady, the airline’s chief operating officer, told Bloomberg on Wednesday.
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