Highlights for quarter ended June 30, 2008 vs. June 30, 2007

Operational

• System-wide ASKMs of 8,154 million, up 71.4%   
• System-wide RPKMs of 5,498 million, up 67.2%
• System wide seat factor of 67.4% vs 69.1%  
• 3.15 million revenue passengers carried up 18% 

Financial

• Revenue of Rs. 28,992 million (US$ 673.7 million), up 46.2%
• Profit before tax Rs. 2,191 million (US$ 50.9 million) vs profit of Rs. 495 million (US$ 12.2 million) , up 343%
• Profit after tax of Rs. 1,434 million (US$ 33.3 million) vs profit of Rs.309 million (US$ 7.6 million), up 401

Exchange rate used 1 USD = INR 43.035

Management Discussion and Analysis (for the quarter)

Domestic operations

Domestic operations accounted for 52% of operating revenues (Rs. 14,901 million US $ 346.26 million) as compared to 76% (or Rs. 13,708 million, US $ 336.75) in the first quarter of last year, reflecting the growing contribution of the Company’s international operations to total revenues.

The Company achieved a domestic seat factor of 72.3% in the quarter ended June 2008 versus 71.2% in the same period a year ago.
 
The ratio of our full-fare to discounted fare was approximately 80:20; yields (Incl YQ) have increased by 7.2% YoY for Domestic operations.

The Company recorded a pre-tax profit on domestic operations of Rs.5,022 million (US $116.7 million) versus a profit of Rs. 1,312 million (US $ 32.2 million) in the same period a year ago.

The key factors driving the domestic performance in the first quarter included:

Rising fuel prices and slowdown in demand in the domestic market

• The domestic aviation industry in India, which was characterized by a huge growth rate over the past few years, is in a consolidation phase with airlines controlling and reducing capacity.
• Though the demand has slowed down in the recent few months, the medium to long term story remains intact and is expected to grow between 12 – 15%. The short term slow down is an impact of increase in inflation rates and consistent increases in air fares.
• The results for Q1 were largely impacted by record high fuel prices which had peaked at close to USD 140 per barrel in June. The average rate of ATF for the quarter was Rs. 57.55 per litre.
• Crude oil prices have cooled since then and the effects of the same will be passed on to airlines in the form of lower ATF costs starting this August. Though the overall industry is expected to will post a loss for the year, the situation, we believe, is set to improve over the next quarter due to controlled capacity increases and or capacity reduction which will bring about more semblance between capacity and demand.
• The rate of capacity induction during this quarter was a mere 13.4% and over the previous quarter, the increase was only 1.9%. Starting July 2008, airlines have reduced capacity to the extent of 10 – 15%. Jet Airways' capacity deployed during this quarter was 1.4% lower than the same period last year.
• Fuel costs were higher by Rs. 2,684 million (US $ 62.4 million) versus the same period a year ago. 

Increase in other operating costs:

• At the Company level, the average staff numbers increased from 10,820 to 13,403 on account of the expansion in level of international operations and a large part of these additions were pilots, engineers and cabin crew.
• 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 and we will continue to closely monitor our costs as part of our turnaround/ improvement program.

International operations

The revenues from our International operations now account for 48% of operating revenues (Rs. 13,770 million, US $ 320.0 million) as compared to 24% (Rs. 4,359 million, US $ 107.1 million) in the first quarter of last year.

The Company achieved a seat factor in international operations of 64.7% for the quarter (65.6% a year ago).

The pre-tax loss on international operations was Rs. 2,831 million (US $ 65.8) as against a pretax loss of Rs. 817 million (US $ 20.1million) in the same period last year. This was largely on account of the start up nature of the new routes to the USA, Gulf that we started during the last few months.
The International results for Q1 were also impacted due to high fuel prices which have not been fully passed on completely in the form of higher surcharges. The impact of higher fuel prices for the quarter was Rs.1,152 million (USD 26.8 million). There is a longer time lag for implementation of surcharges in the International markets but over the last few weeks, there have been increases in such surcharges which will help mitigate such high fuel price impact.

Due to a delay in the start of our flights to Shanghai/ San Francisco, we had, during the quarter incur costs of idle aircraft and this amounted to Rs.309 million (US $ 7.2 million). These aircraft have been fully utilized starting June 2008.

We have also implemented some network initiatives in which we have right sized some of our capacities to South East Asia and North America.

We have not postponed or deferred any aircraft deliveries and will complete our first phase of International expansion by October 2008, by which time our wide body fleet will consist of 22 aircraft – 10 B777 – 300 ER and 12 A330 – 200 aircraft. 

During this quarter, we have changed our accounting policy for charging depreciation on our narrow body aircraft used for the domestic operations and we will now charge depreciation on a Straight Line (SLM) basis as compared to a Written Down Value (WDV) basis. This method is in line with the method that we follow to depreciate our Wide body aircraft that we use for International operations.

The impact on account of this change in method was Rs. 9,159 million (US$ 213 million) for the quarter at the company level.

Outlook

The current quarter (Q2) is traditionally a low season but reduction in capacities and the increases in fares/ surcharges will improve the situation to a large extent. Crude oil price movements over the last two weeks will help this cause further.

We are currently the market leaders by a comfortable margin and will consolidate our position in the domestic market. Our seat factors have been consistently higher than the Industry average and so have our yields. Our capacity addition plans in the short term is largely ATR aircraft, which we will deploy on regional routes.

The rate of capacity induction in the domestic environment has seen a steady decrease quarter over quarter. Airlines are reportedly going slow on capacity addition and some airlines are also reportedly pulling out of certain markets/ routes. These factors should help in bringing stability to the market and help to increase yield.

We plan to launch flights to Dubai in August & Saudi Arabia by October 2008, which will complete our first phase of International expansion. Forward bookings on international routes are as per our expectations.

Financial results of Jet Lite for the Q1 and year ended June 2008

• Achieved seat factor of 72.4%  (v/s 73.7% for Q1 FY08)
• Achieved Revenues of Rs. 4,260 million (US $ 98.9 million) v/s 3,600 million (US $ 88.5 ) for Q1 FY 2008.
• Loss after tax of Rs. 1,348 million (US $ 31.3 million) v/s Rs. 1,069 million (US $ 26.3 million) for Q1 FY’08

Exchange rate used 1 USD = INR 43.035

Awards and Recognition

• Jet Airways won Top Honours at the prestigious Cnbc-Awaaz Travel Awards 2008. Jet Airways, India's premier airline, has emerged triumphant as India’s ‘Airline with the Best Business Class’ and ‘Airline with the Best Economy Class’ categories for its outstanding domestic Première and Economy Class products, at the prestigious CNBC-Awaaz Travel Awards 2008.
• Jet Airways voted One of the World’s Best Airlines. Jet Airways, India's premier international airline, has been recognised for the excellence and quality of its service and in-flight experience in the ‘Airline of the Year Category’ at the second Annual awards ceremony, held at the British Museum in London on 17 June 2008.

About Jet Airways

Jet Airways currently operates a fleet of 85 aircraft, which includes 10 Boeing 777-300ERs aircraft, 54 classic and next generation Boeing 737-400/700/800/900 aircraft, 10 Airbus A330-200 aircraft, and 11 modern ATR 72-500 turboprop aircraft. With an average fleet age of 4.30 years, the airline has one of the youngest aircraft fleet in the world. Jet Airways operates over 385 flights daily.
 
Jet Airways currently flies to 62 destinations that span the length and breadth of India and beyond, including New York (JFK and Newark), Toronto, Brussels, London Heathrow, Singapore, Kuala Lumpur, Colombo, Bangkok, Dhaka, Kathmandu, Bahrain, Kuwait, Doha Muscat, Abu Dhabi, Shanghai, and San Francisco. The airline plans to extend its international operations to other cities in North America, Europe, Africa and Asia in phases with the introduction of wide-body aircraft into its fleet. Since its inception in May 1993 to June 2008, Jet Airways has flown over 86.0 million passengers.

About Jet Lite

Jet Lite currently operates a fleet of 24 aircraft, which includes 17 Boeing B737 and 7 CRJs. Jet Lite operates around 127 flights daily.
 
Currently serves 31 destinations within India and also flies to Colombo and Kathmandu.

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."