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India's only profitable private carrier, Jet Airways, reports profit for the fourth quarter
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26 Jun 2007
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India's only profitable private carrier, Jet Airways, reports profit after tax of Rs.880 mn (US$ 20.3 mn) for the fourth quarter; International operations also turn profitable; announces 60% dividend.
Highlights for quarter ended March 31, 2007 vs. March 31, 2006
Operational:
• System-wide ASKMs of 4,679 million, up 19.8%
• System-wide RPKMs of 3,396 million, up 20.7%
• System wide seat factor of 72.6% vs.72.0%
• Break-even seat factor at 67.1% vs. 67.2%
• 2.71 million revenue passengers carried, vs. 2.67 million
Financial:
• Operating Revenue of Rs. 19,783 million (US$ 455 million), up 23.2%
• EBITDAR of Rs. 4,599 million (US$ 105.8 million), up 49.4%
• Profit before tax and before sale-leaseback Rs. 1,215 million (US$ 27.9 million) vs Rs. 901 million (US$ 20.2 million), up 35%
• Profit after tax of Rs. 880 million (US$ 20.3 million)
Exchange rate used 1 USD = INR 43.47
Highlights for year ended March 31, 2007 vs. March 31, 2006
Operational:
• System-wide ASKMs of 17,698 million, up 33.1%
• System-wide RPKMs of 12,307 million, up 28.5%
• System wide seat factor of 69.5% vs. 72.0%
• Break-even seat factor at 71.4%
• 10.73 million revenue passengers carried, up 12.2%
Financial:
• Total Revenue of INR 74.0 billion (US$ 1,702.6 million), vs total revenue of INR 60.9 billion (US $ 1,364.5 million)
• EBITDAR of INR 10.1 billion (US$ 231.9 million) vs EBITDAR of INR 13.6 billion (US $ 305.4 million)
• Profit before tax of INR 514 million (US$ 11.8 million) vs. profit before tax of Rs. 7,223 million (US$ 161.9 million)
• Profit after tax of INR 280 million (US$ 6.4 million) vs. profit after tax of Rs. 4,520 million (US$ 101.3 million)
Exchange rate used 1 USD = INR 43.47
Management Discussion and Analysis (Fourth quarter)
Domestic operations:
Domestic operations accounted for 76% of revenues (Rs. 15,094/US$347 million) as compared to 87% (Rs. 13,926 / US$312million) in the fourth quarter of last year, reflecting the growing scale and contribution of the Company‘s international operations.
The fourth quarter is normally not the peak travel quarter in the Company‘s fiscal year. The Company achieved a domestic seat factor of 70.3% in the quarter ended March 31 versus 73.8% in the same period a year ago and 70.1% for the quarter ended December 2006.
Our full-fare versus discounted fare mix remained stable at approximately 30:70 and yields have increased by 5% YoY.
The Company generated pre-tax profit (excluding sale-leaseback) on domestic operations of Rs. 1,183 million (US$ 27.2 million) versus Rs. 733 million (US$ 16.6 million) in the immediately preceding quarter and Rs. 1,343 million (US $ 30.1 mn) in the same period a year ago.
The key factors driving a strong domestic performance in the fourth quarter included:
Slowdown in capacity induction in the domestic market:
• The rate of capacity induction during this quarter and more generally in the market has started to slow down. For the quarter ended March 2007, capacity grew by 36.7% over the same period last fiscal and this rate of growth is much lower than what the industry has been seeing over the last few quarters. The capacity growth for the industry was 48.0%, 40.8%, and 44.4% for Q1, Q2 and Q3 of FY 2007 respectively.
• For the year, the number of passenger carried by all scheduled carriers combined grew by approximately 44% year-on-year.
Stable fuel costs:
• Fuel costs were higher marginally by Rs. 14 million (US$ 0.3 million) versus the same period a year ago; this was largely due to the larger number of flights operated. The average fuel rate was lower at Rs. 36.55 per litre vs. Rs. 36.05 a year ago.
• The impact of fuel and other surcharges fully mitigated the high costs of fuel and additional costs related to congestion during the quarter.
Increase in other operating costs:
• At the Company level, the average staff numbers increased from 8,727 to 10,590 on account of the expansion in level of operations. New hires among pilots, engineers and cabin crew constituted the bulk part of this increase.
• The increases in all other costs were in line with the increase in level of operation and in most instances even lower than that of the same period last year.
International operations:
The revenues from our International operations now form one fourth of the total operating revenues for the Company (Rs. 4,689/US$ 107.8 million) as compared to 13% (Rs. 2,134/US$ 47.8 million) in the fourth quarter of last year.
The Company achieved a record seat factor in international operations of 76.6% for the quarter (66.5% a year ago; 67.6% in the third quarter).
The pre-tax profit on international operations was Rs. 31 million (US$ 0.7 million) as against a pretax loss of Rs. 443 million (US$ 9.9 million) in the same period last year and a pre-tax loss of Rs 113 million (US$ 2.6 million) in the immediately preceding quarter. Higher seat factors on key routes and lower fuel costs led to the improved performance and the turnaround of the international operations.
Over the last four quarters our international seat factors have gone up from 66% to 76%, which is highly creditable given the competitive nature of the International business segment.
With effect from January 23, the Company has commenced daily services to Bangkok from Delhi and Kolkata. The Delhi route has been profitable in this quarter itself.
Management Discussion and Analysis (Full year 06-07)
System wide the Company increased its operating revenues by 25% over FY 06'. Total revenues reached US$ 1.7 billion up 22% compared to FY 06'. Profit before tax was US$ 11.8 million and profit after tax was US$ 6.4 million.
The Company showed a continuous improvement in both domestic and international operations on a quarter on quarter comparison. Domestic operation remained profitable in all four quarters and improved to a US$ 27.2 million profit before tax in Q4. International operation recorded a loss of US$ 42 million in the first half of the Financial Year. International operation turned to break even in the third quarter and reached profitability in the fourth quarter of the financial year. This vindicates our stand that any major international route normally takes 12-18 months to mature and start contributing to the bottom line.
Jet Airways has been able to achieve a system wide profit in FY 07'. This in a year where the whole domestic industry is estimated to lose US$ 400-500 million and despite the fact that start up losses on international operations in the first half had to be accounted for.
Outlook
The recent developments in the domestic aviation industry signal the strong need and the first signs of consolidation and this, we believe, will lead to more rational pricing and improved operating performance for domestic carriers in India over the next few quarters.
Despite a very challenging FY 2007, both on international and domestic, Jet Airways has remained profitable and with this consolidation in the domestic market, we expect the situation to improve over the next few quarters.
FY 2008, especially Q1 and Q2, will remain challenging because of a very rapid and huge fleet expansion especially on the international operations. In this year we plan to start our operations to North America / Canada / Africa and Gulf routes.
The turnaround of JetLite (earlier Sahara) will also pose a key challenge to the Company‘s resources œ both operationally and financially.
Awards and Recognition:
• In February 2007 Jet Airways accorded Amity Corporate Excellence Award by the Amity International Business School, Noida.
•In March 2007 Jet Airways accorded the — Best Full Service Airline-India, by the Air Passengers Association of India (APAI).
• In May 2007 for the third year in succession Jet Airways has been conferred the Freddie Award, this time in the highly coveted category of — Programme of the Year for Japan, Australia, Asia and Pacific regions.
About Jet Airways
Jet Airways currently operates a fleet of 62 aircraft with 2 Boeing 777-300 ER, 48 classic and next generation Boeing 737-400/700/800/900 aircraft, 4 Airbus A330-200 aircraft and 8 modern ATR 72-500 turboprop aircraft. With an average fleet age of 5.1 years, the airline has one of the youngest aircraft fleets in the world.
Jet Airways operates over 340 daily flights to 50 destinations that span the length and breadth of India and beyond, including London Heathrow in U.K., Singapore, Kuala Lumpur in Malaysia, Colombo in Sri Lanka, Bangkok in Thailand and Kathmandu in Nepal. The airline plans to extend its international operations to North America, Europe, Africa and Asia in the coming years with the induction of wide-body aircraft into its fleet in 2007. Since inception in May 1993 until mid-June 2007, Jet Airways has flown over 73.5 million passengers.
Disclaimer: Certain statements in this release concerning Jet Airways‘ future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in the aviation business including those factors which may affect our cost advantage, wage increases, our ability to attract and retain professionals, time and cost overruns on various parameters, our ability to manage our international operations, liability for damages, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital, and general economic conditions affecting our industry. Jet Airways may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. Jet Airways does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company. |
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