Operational

• System-wide ASKMs of 8,416 million, up 55.3%  
• System-wide RPKMs of 5,579 million, up 54.1%
• System wide seat factor of 66.3% vs 66.8% 
• 2.83 million revenue passengers carried up 7.6% 

Financial

• Revenue of Rs. 32,584 million (US$ 693.8 million), up 44.6%
• Loss before tax Rs. 5,785 million (US$ 123.2 million) vs profit of Rs. 425 million (US$ 10.7 million)
• Loss after tax of Rs. 3,845 million (US$ 81.9 million) vs profit of Rs.283 million (US$ 7.1 million)
   Exchange rate used 1 USD = INR 46.965 for current year and 1 USD = INR 39.845  for previous year

Highlights for half-year ended September 30, 2008 vs. September 30, 2007

Operational

• System-wide ASKMs of 16,570 million, up 62.8%  
• System-wide RPKMs of 11,077 million, up 60.3%
• System wide seat factor of 66.9% vs 67.9% 
• 5.98 million revenue passengers carried

Financial

• Revenue of Rs. 61,576 million (US$ 1,311.1 million), up 45.3%
• EBITDAR of Rs. 4,330 million (US$ 92.2 million)
• Loss before tax Rs. 3,594 million (US$ 76.5 million) vs profit of Rs. 920 million (US$ 23.1  million)
• Loss after tax of Rs. 2,411 million (US$ 51.3 million) vs profit of Rs.592 million (US$ 14.9 million)
  Exchange rate used 1 USD = INR 46.965 for current year and 1 USD = INR 39.845 for previous year

Management Discussion and Analysis (for the quarter)

The impact of the global meltdown and the resultant slowdown in traffic has been felt by airlines across the world and India has been no exception to this. This phase is following the one wherein airlines had to contend with record high crude oil prices. The quarter ended September is historically the weakest quarter of the year in terms of demand.

Domestic operations

Domestic operations accounted for 48% of operating revenues (Rs. 15,014 million US $ 319.69 million) as compared to 69% (or Rs. 12,526 million, US $ 314.36) in the second quarter of last year. In Q1 FY09 this year we had a similar proportion of domestic and international revenues (approximately 50:50).

The Company achieved a domestic seat factor of 66.9% in the quarter ended September 2008 versus 66.3% in the same period a year ago.
 
During the quarter, we have implemented two fare increases in August and September respectively & there was an increase in the fuel surcharge as well, which has resulted in our yields increasing by 33.8% over the same quarter last year. As compared to Q1 FY 2008, yields were higher by 18.2 %.

The Company recorded a pre-tax loss on domestic operations of Rs.2,866 million (US $61.4 million) versus a profit of Rs. 1,606 million (US $ 40.3 million) in the same period a year ago. The profit figure for the previous year included an extraordinary  impact of Sale and Lease back of Rs. 3,148 million (US $ 79 million)

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

Rising fuel prices and slowdown in demand in the domestic market

• Though oil prices have cooled off in the recent past, the results for Q2 were impacted by higher fuel prices wherein crude oil peaked at $ 147 in July. The average rate of ATF for the quarter was Rs. 67.18 per litre, which was higher than Q2 FY 2008 rates by close to 69% and higher than Q1 FY 2009 rates by 12%
• We expect the impact of the recent reduction in crude oil prices to be passed on to airline in the current quarter.
• The rising levels of inflation and the impending recession globally has also impacted travel patterns to a very large extent and we expect a slowdown in demand growth over the next few quarters. Having said that, we still expect the Indian domestic market to grow at close to 5 – 10% over the next few quarters. The reduction that we have seen over the last few months is largely an impact of capacity reduction in the industry.
• If capacity is sustained at current levels and airlines don’t add any further routes/ aircraft, we expect the Industry seat factors to increase over the next few quarters, though the overall industry is expected to post losses for the year.
• We were also impacted due to the depreciation of the Rupee from around Rs. 43 in Q1 to a dollar to close to Rs. 47 in Q2 since close to one third of our operating expenses are in US dollars whereas only 15% of revenues are in US dollars.
• 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.
• Our domestic route network will be a reduced one with the cancellation of certain loss making routes starting this winter and we plan to phase out some of our domestic capacity on expiry of leased aircraft.

International operations

The revenues from our International operations now account for 52% of operating revenues (Rs. 16,199 million, US $ 344.92 million) as compared to 31% (Rs. 5,660 million, US $ 142.05 million) in the second quarter of last year.

The Company achieved a seat factor in international operations of 66 % for the quarter (67.5% a year ago).

The pre-tax loss on international operations was Rs. 2,899 million (US $ 61.7 million). This includes Rs. 1,132.6 (US $ 24 million) profit on sale and lease back of one aircraft (A330). As against this, we had a pretax loss of Rs. 1,181 million (US $ 29.6 million) in the same period a year ago.

On the International routes as well, we had an impact of demand slowdown as well as rising fuel prices. The impact of higher fuel prices for the quarter was Rs.1,471 million (USD 37.1 million).

During the quarter, we started flights to Dubai from Mumbai & Delhi & to Muscat from Thiruvananthapuram

As a result of our network rightsizing, we had instances of aircraft on ground and the impact on account of this amounted to Rs.418.7 million (US $ 8.9 million) for the quarter.

We have announced the discontinuation of our Mumbai – Shanghai – San Francisco route w.e.f. January 2009 and the Amritsar – London route w.e.f. December 2008. These two routes have contributed close to 50% of our International losses for Q2.

With the exception of Bangalore – Brussels which will start on October 31, 2008, there are no further expansions planned in the near future. In addition to the 2 B777 aircraft already on ground as of Q2, this network rationalization will render 4 wide body aircraft surplus and we are currently in the process of leasing out such aircraft for a medium term period.

Outlook

We are currently in the best quarter of the year. In addition to the crude oil price reduction, we will also have a positive impact on Revenues due to the fare increases that we have implemented over the last few months in the domestic business.

The capacity reduction in the industry will result in higher seat factors.

Starting November 2008, the withdrawal of the 5% commissions which are currently payable to travel agents will increase the net yields for airlines.

We have deferred our expansion plans and are postponing our aircraft deliveries by at least a year. We will be phasing out 4 B737 aircraft and not replace them.

In respect of all future lease expiries, we will take a call on whether to replace them or not closer to such expiry dates. We have not cancelled any aircraft orders.

On the domestic front, we think the industry will continue to grow and this will mean the domestic business will get back to profitability faster than expected.

Our focus on domestic market consolidation will continue and so will our cost reduction initiatives. We are currently the market leaders and control over one third of the 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.

We are eliminating our highest loss making routes from the International network and have rightsized our capacities on the North America routes.
 
However, the International market is likely to be impacted by the slowdown in the world economy, where we expect a slowdown in traffic. Despite this, we are seeing a good buildup of traffic, which is typical of Q3 historically. Structurally, the International business will take another 1 – 2 quarters to stabilize and the reduction in capacity will help this cause further.

Financial results of Jet Lite for the Q2 and year ended September 2008

• Achieved seat factor of 61.2%  (v/s 68% for Q2 FY08)
• Achieved Revenues of Rs. 4,265 million (US $ 90.81 million) v/s 3,639 million (US $ 91.34 ) for Q2 FY 2008.
• Loss after tax of Rs. 2,730 million (US $ 58.1 million) v/s Rs. 862.7 million (US $ 21.7 million) for Q2 FY’08
  Exchange rate used 1 USD = INR 46.965 for current year and 1 USD = INR 39.845  for previous year

During the quarter, we have executed a codeshare agreement between Jet and Jetlite to offer passengers better connection and wider connectivity. We also now have a common reservation system (SABRE) for both the carriers which will help revenue synergies and has resulted in higher seat factors for Jetlite since then.

From August 2008, we have started selling food on – board which will now be a revenue stream for the airline.

In September 2008, we were able to reduce the JetLite staff strength by close to 1,000 staff and this will help reducing the unit costs further since we are now able to better synergise the operations between Jet and JetLite. Of these, 457 were absorbed in Jet Airways and the rest took a VSS.

The change in livery and new branding for Jetlite will be rolled out in a month or two.

With these initiatives and with the reduction in ATF prices, we believe we can turnaround the Jetlite operations in the next few months.

Awards and Recognition

• Jet Airways voted one of the world’s Top 10 airlines in “ Best in travel Poll 2008” Voted one of the Top 10 Airlines in the world, Jet Airways was seventh in a poll of the world’s best airlines, while being placed fifth in the Business Class Category for its acclaimed, herringbone-configured Première product; and sixth in the Cabin services category
• Jet Airways honoured with awards at Changi airline awards ceremony at Singapore.  Jet Airways received awards for being one of the ‘Top 5 Airlines by Growth in Passenger Carriage’ and one of ‘Top 5 Airlines by Growth in Cargo Carriage.’ The awards were contested by the 78 airlines that operate 4,400 weekly scheduled flights at Changi Airport. 

About Jet Airways

Jet Airways currently operates a fleet of 84 aircraft, which includes 10 Boeing 777-300ERs aircraft, 52 classic and next generation Boeing 737-400/700/800/900 aircraft, 11 Airbus A330-200 aircraft, and 11 modern ATR 72-500 turboprop aircraft. With an average fleet age of 4.34 years, the airline has one of the youngest aircraft fleet in the world. Jet Airways operates over 395 flights daily.
 
Jet Airways currently flies to 64 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. Since its inception in May 1993 to September 2008, Jet Airways has flown over 88.8 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 135 flights daily.
 
Currently serves 28 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.”