Deccan Aviation: Mkt share at 19.8% as of Dec-end

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Deccan Aviation has declared its third quarter numbers. The company posted a net profit of Rs 9.6 crore (Rs 96 million) against a net loss of Rs 42.9 crore (Rs 429 million) in the previous quarter.

MG Mohan Kumar, Director - Finance, says that their yield is up by Rs 150 on a QoQ basis. He says that Deccan had a market share of 19.8% as of December.

He sees higher load factors in January, and informs that that February and March are likely to be lean.

Excerpts from CNBC - TV18's exclusive interview with MG Mohan Kumar:

Q: Is this just a seasonal upturn or do you think you can sustain these numbers and inch closer to operating profitability?

A: Firstly, we saw a very good month of December and we are seeing the same trend in January. Of course in December, we lost revenue due to cancellations basically on account of fog. But we are seeing a better January, and February and March is going to be a lean season.

But they are looking much better than last February and March; that is a good thing in the industry that shows that the capacity, which has been added is getting absorbed. The yield and the average fare going up is a good sign for the industry as well as for the company.

Q: How much exactly has the yield increased by in this quarter and how much do you think you can hold by way of an upside?

A: The yield has gone up by Rs 150 compared to the corresponding last quarter. In spite of the capacity absorption yield going up, which is a good sign, and in January, we are not seeing the yield like December. However it is definitely much better than last January. That means the seasonality is also changing in the industry in spite of the capacity increase.

Q: Will you slip back into a net loss once again next quarter, once some of the seasonal factors recede a little bit?

A: If you see the December quarter, we didn't have operational profit, we had an operational loss and the profit is coming in on account of other revenues. And this quarter - that is the March quarter - will not have much of other income. So there may not be any operational or net profit for the current quarter.

Q: Where is the current market share at for Deccan? Are you looking at any more fund raising for your expansion plans?

A: Yes, we are looking at fund raising but of course we are not in a hurry to raise the funds. At the moment, we are well funded. To keep the expansion plans going on, and also to take delivery of the aircrafts that we have ordered, we need to keep raising funds; both debt as well as equity, and that is what we are into.

As far as market share is concerned, we are at 19.8% now and again maintaining the second position in the industry. Of course, to catch up with the number one is going to take some time because there is a lot of capacity coming in, and we are trying to stabilize our own capacity during this year. We don't have much aircraft delivery coming up in this financial year, particularly Airbus. So the capacity increase is slightly contained for this calendar year.