Jet Airways reports PAT of INR 530 million (US $ 10.4 million) for Q4 FY09;based on improved International performance, effects of restructuring program, reduced fuel prices and exceptional items; significantly improved EBITDAR margin of 20.8%. Challenging times ahead.
Highlights for quarter ended March 31, 2009 vs. March 31, 2008
Exchange rate used 1 USD = INR 50.72 for current year and 1 USD = INR 40.12 for previous year & 48.71 for the Q3 FY’09
Highlights for the year ended March 31, 2009 vs. March 31, 2008
Exchange rate used 1 USD = INR 50.72 for current year and 1 USD = INR 40.12 for previous year
Management Discussion and Analysis (for Q4 FY 09 vs Q4 FY 08)
Despite lower fuel prices during the Quarter, the economic slow down has impacted the flow of air traffic and flight movements across the world and as a result, the aviation sector continue to face turbulent times. IATA forecasts a demand drop 3% in this year. The global recession is set to impact the corporate travel, as earnings are slowing down and companies are opting to postpone their growth plans. We expect this phase to continue in the ensuing year as well.
In India, the downward trend in domestic aviation market continued. With the upcoming lean season, load factors and yields will continue to be under severe pressure.
Under these difficult circumstances, the Company has been able to achieve an EBITDAR margin of 20.8% in Q4 FY09 compared to 7.7% in Q4 FY08 and 11.8% in Q3 FY09. This is largely due to rationalization of capacity, stabilization of wet lease operations of wide body aircraft and implementation of a comprehensive restructuring program.
Domestic operations accounted for 43.9% of operating revenues (Rs. 10,815 million US $ 213.2 million) versus 58.0% (Rs. 16,001 million, US $ 398.8) in the fourth quarter of the previous year.
The Company achieved a domestic seat factor of 64.6% in Q4 FY09 versus 74.0% in Q4 FY08 and 62.4% in Q3 FY09.
Domestic operations showed a stable yield compared to the same period a year ago however a 18.8% decrease over Q3 FY09.
The Company recorded a pre-tax profit on domestic operations of Rs.1,122 million (US $22.1 million) versus a loss of Rs. 1,108 million (US $ 27.6 million) in the same period a year ago. The results have to be seen in the context of one time positive exceptional items amounting to Rs. 2,166 million (US$ 42.7 million).
The key factors impacting domestic performance in the fourth quarter included:
The revenues from our International operations now account for 56.1 % of operating revenues (Rs. 13,841 million, US $ 272.9 million) versus 42.0% (Rs. 11,598 million, US $ 289.1 million) in the fourth quarter of last year.
The Company achieved a seat factor of 75.3% for Q4 FY09 versus 69.0% for Q4 FY08 and 67.8% for Q3 FY09.
The unit cost decreased by 13.8%, whereas yields remained stable. As a result the break even load factors have reduced to mid seventies in Q4 FY09 versus high eighties in Q4 FY08.
The EBITDAR margin in the international operation stands at 24% for Q4 FY09 versus 1.6% for Q4 FY08 and 11.2% for Q3 FY08
The pre-tax profit on international operations was Rs. 273 million (US $ 5.4 million). As against this, the company had a pre tax loss of Rs. 2,633 million (US $ 65.6 million) in the same period a year ago. The current quarter result includes, profit on sale and lease back of aircraft amounting to Rs. 440 million (US$ 8.7 million).
Having incurred heavy losses in Q1 & Q2 of FY09, we have witnessed continuous improvement in performance in Q3 & Q4 FY09.
Our efforts to stabilize the network by restructuring and allocating the right aircraft capacities to the international routes and eliminate surplus capacities by leasing out long haul aircraft has enabled the Company to achieve EBT in Q4. The major network initiatives include reduced capacity on routes to US/Canada by using A330s in place of the B777s and higher B737 utilization on Gulf/ASEAN routes.
As a result of eliminating excess capacity, nine long haul aircraft have become surplus to our requirement and have been leased out as of today.
The global economic environment coupled with economic realities of the airline industry in India requires exceptional efforts to return to breakeven and profitability. We expect the year ahead to be challenging in terms of continued sluggish demand for both Domestic and International operations. This is more so on premium segments, thus putting pressure on overall yields.
The Company has in anticipation already initiated a comprehensive cost reduction initiative which includes the following:
The restructuring program enables the Company to achieve significant cost savings and also help the Company to preserve cash in a difficult financial environment. The implementation of the program is being monitored continuously and the full impact of this program would be seen in the coming financial year.
The Company is adapting to new market realities and intends to capture price sensitive markets through our new product “Jet Airways Konnect” in addition to the existing Jet Lite offering.
The Company sees additional market opportunities in the International market with B737 operations to Jeddah, Riyadh and additional services to ASEAN & SAARC regions in the near future.
Financial results of Jet Lite for the Q4
We believe that 100% code share agreement with Jet Airways will help us to improve the traffic volumes. Our continued focus on synergies in processes & costs between Jet Airways & Jet Lite and improving product quality will help us to improve the profitability. Jet Lite has witnessed improved seat factor in the last few months.
Awards and Recognition
Consolidated Financial Results for the year ended 31st March, 2009About Jet Airways
Jet Airways currently operates a fleet of 86 aircraft, which includes 10 Boeing 777-300ERs aircraft, 50 classic and next generation Boeing 737-400/700/800/900 aircraft, 12 Airbus A330-200 aircraft, and 14 modern ATR 72-500 turboprop aircraft. With an average fleet age of 4.53 years, the airline has one of the youngest aircraft fleet in the world. Jet Airways operates over 370 flights daily.
Jet Airways currently flies to 63 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 & Dubai. Since its inception in May 1993 to March 2009, Jet Airways has flown over 93.9 million passengers.
About Jet Airways Konnect
Jet Airways Konnect is a no-frills Economy Class service on key domestic routes, designed to meet the needs of the low fare segment with 2 B 737 & 6 ATRs
The airline connects five major Indian metros- Mumbai, Delhi, Chennai, Bengaluru and Kolkata -with several destinations across India.
About Jet Lite
Jet Lite currently operates a fleet of 23 aircraft, which includes 16 Boeing B737 and 7 CRJs. Jet Lite operates around 114 flights daily.
Currently serves 28 destinations within India and also flies to Colombo and Kathmandu.
© Jet Airways (India) Ltd.