Jet Air makes profit in Q1 after 5 qtrs, stock up 2%

After five straight quarterly losses, Jet Airways has reported a net profit of Rs 24.70 crore for the April-June period on improved yields and cost cutting measures. The country's largest private airline said if not for a  forex loss of Rs 69 crore, it would have posted better results.

Sales of the company too rose 30% to Rs 4587 crore as the airline witnessed sharp increase in its passenger load factors aon account of rival Kingfisher Airlines  curtailing operations.

Post the announcement of the results, company stock moved up 2% to Rs 379.

These are factors that impacted  Jet Air's Q1 financial performance

*The airline increases fares by 12% in March  leading to margin improvement. EBITDAR margins stood at 15.4% versus a negative EBITDAR margin of 3.4%,year-on-year.

*The airlines saw its yields improving to 10% from 8.6%,YoY domestically. On its international network too, the airlines yields increased to 17% from 11.03%,YoY.

*Its domestic traffic grew 10% and international grew 20%.

*The airline seems to be benefitted by ancillary revenues through various brand tie-ups and has also said that it will continue to do so. The firm has aims to enhance its ancillary revenues to USD 10 from the current USD3.5

Meanwhile, Nikos Kardassis, the airline's CEO said that higher fuel cost and a weak rupee against the USD weighed heavily on the sector's profitability. "In fact, the aviation turbine fuel cost was up 13% during the quarter,YoY," he said.

Crude oil prices have since come off the highs of USD 120 per barrel and now range between US 100 - 105 per barrel However, benefits of the same have not accrued due to the depreciation of the Indian Rupee, which has dipped from levels of Rs 44.70, an increase of around 24.4%, which has also put pressure on our dollar denominated costs.

The CEO also expressed concerns on the sector's outlook due to high operating cost and an excess capacity environment, which will caused financial strain on balance sheets of airlines. However, the airline does not expect any major capacity increase given the delivery schedule of airlines in the sector.

On the company's outlook Jet said: High Crude prices, rupee depreciation and slow down in economy will impact the operating margins in short term. Imposition of higher user charges and levies at Delhi Airport's T3 terminal will lead to airline passing on the costs to passengers, which in turn may affect the passenger growth and / or ability of the airline to increase fares.

The company said its efforts to reduce cost is an ongoing process and it also said that it intends to strengthen its balance sheet by bringing down its debt too