Jet Airways has reported the highest-ever loss of Rs 891 crore for the quarter ended September 30, 2013, largely due to the economic slowdown, rising fuel costs and rupee depreciation. Abu Dhabi-based Etihad has a 24 per cent stake in Jet Airways.
The loss reported by the country’s second largest airline (going by the number of passengers flown) has widened by over eight times from Rs 99.6 crore reported in the same quarter a year ago.
The revenue for the period was up 1.7 per cent at Rs 4,267.7 crore from Rs 4,194.7 crore during the three months ended September 2012.
“(The) Indian aviation industry witnessed increasing cost challenges, mainly due to rupee depreciation against the US dollar, high fuel prices and increase in airport charges in certain stations, putting pressure on the bottom line,” Gary Toomey, Jet’s Chief Executive Officer, said in a press statement.
Fuel costs, which account for around 35 per cent of an airline’s operating expenditure, went up by 8 per cent year-on-year, the company said.
During the quarter, the rupee hit an all-time low of 68.8 against the dollar. For Indian carriers, around 70 per cent of the cost is in dollar terms. Moreover, the second quarter is generally a sluggish period as travel slows down due to the monsoon.
The lean season and the economic slowdown resulted in an 11 per cent drop in per passenger yield to Rs 7,376 from Rs 8,335.
During the period, there were also instances of ‘aircraft on ground’, which had a cost impact of Rs 123 crore on the company.
“When a large, reputed airline like Jet makes losses quarter after quarter, it means something's really amiss. I wonder how many quarters we will need to wait till States such as Maharashtra, Tamil Nadu, Karnataka and West Bengal realise the need to rationalise the excessive taxes imposed on aviation turbine fuel,” said Amber Dubey, Partner and head-aerospace and defence at global consultancy firm KPMG.
A 10-year tax holiday on maintenance repair and overhaul units and fiscal benefits to set up viable airports in Tier 2/3 cities are the need of the hour, he added.
According to a recent report by airline consulting firm Centre for Asia Pacific Aviation, losses for the domestic airline sector are expected to exceed Rs 3,000 crore in the second quarter ending September 30.
However, for the third quarter, Jet has painted a slightly optimistic picture. “Domestic fare revision which was made at the fag end of Q2 will start showing a positive effect in the balance part of the year. The forward booking trends for the quarter are quite encouraging,” it said. Generally, the third and fourth quarters are the strongest for most airlines due to the many festivals and holidays during that period.
Ahead of the results announcement, the Jet Airways scrip was down 0.65 per cent to close at Rs 345.5 on the National Stock Exchange on Wednesday.
adith.charlie@thehindu.co.in