For the quarter in question, severely depreciating rupee against dollar, ever escalating Aviation Turbine Fuel prices (ATF) and the imposition of levies and charges on account of improved infrastructure at Delhi T3, has resulted in an increase in operating costs. However, Yield improvement coupled with increase in demand and stringent cost control measures has helped Jet Group to post Profit after Tax of INR 364 million (US $ 6.6 million)
Q1FY13 saw an increase of around 13% in fuel rates (over Q1 FY12), which already had a high base last year. The result also includes an amount of INR 1,703 million or (US $ 30.6 million) on account of foreign exchange translation losses [realised FX Loss of INR 1,160 million (USD $ 20.9 million) and unrealised FX loss of INR 543 million (USD $ 9.8 million)], which has impacted the overall results.
Jet Group continues to maintain its leadership position in the Indian aviation industry with the highest market share of 27.9 % for the quarter ending June 2012.
Mr. Nikos Kardassis, Chief Executive Officer, Jet Airways (I) Ltd said, “Fuel cost increase and depreciation of the Indian Rupee vis-à-vis the US Dollar weighed heavily on the industry's profitability. In fact, the ATF prices per litre were up by 13% vs. Q1 FY12 and up by 3% vs. Q4 FY12.
Crude oil prices have since come off the highs of US $ 120 per barrel and now range between US $ 100 - 105 per barrel (Brent crude). 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 in Q1 FY 12 to Rs. 55.615 in Q1 FY13, an increase of around 24.4%, which has also put pressure on our dollar denominated costs.
Despite having a natural hedge because of our US $ denominated earnings, we had to recognize forex losses to the extent of INR 1,703 Million or (US $ 30.6 Million) for the quarter on account of such exchange rate fluctuation.
The industry has been going through a turbulent time over the last few quarters due to high costs and an excess capacity environment, which has caused financial strain on airlines. Going forward, we do not expect any major capacity increase given the delivery schedules of airlines in the sector.
As India's premier airline, we continue to strive in our endeavor to enhance our guest experience through various strategic marketing and customer friendly initiatives. This will help us to achieve customer delight, which in turn will further help Jet Airways build its industry benchmarks of service excellence and quality, with convenience and comfort.
However, in spite all the challenges, the achievements this quarter would not have been possible without the persistent efforts, commitment and enthusiasm shown by our staff.”
Domestic operations accounted for 44% of total revenues INR 20,677 million (USD 371.8 million). Revenues were up by 33.7% YoY. Revenue per RPKM (yields) were up 10% vs. Q1 FY12 and by 8.6% vs. Q4 FY12.
Domestic traffic for the Jet Airways Group grew by 10% for the quarter versus same period last year. As against this, industry traffic grew by 1%.
Passenger Load factors for Jet Airways Domestic operations was 76.2% for Q1 FY13 and Capacity in terms of ASKMs was 3,705 million which is up by 15.2% versus Q1 FY12.
International operations accounted for 56% of total revenues INR 26,439 million (USD 475.4 million). International Revenues were up 29.8% vs. Q1 FY12 on account of strengthening yields. Our Revenue per RPKM on the international flights went up by 21.2% YoY.
We achieved seat factor of 86.3% in Q1FY13 versus 80.5% in Q1FY12.The EBITDAR margins are at 17.0% in Q1 FY13 versus 11.2% in Q1 FY12 despite higher fuel costs and depreciating Indian Rupee.
For the quarter, International traffic grew by 20.4% for the quarter versus same period last year.
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 T3 airport 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.
Q2 domestic traffic trends will reflect seasonality in seat factors though yields continue to be strong. The industry capacity growth is expected to be very modest (less than 5% for the year) and this will result in overall yields and seat factors remaining stable for the balance part of the year.
International loads continue to be strong for the second quarter reflecting high seasonality.
Our efforts to reduce costs (ex-fuel), including route rationalisation, contract renegotiation, productivity improvements will help us to improve operating margins and these have started showing. The Cost per ASKM (ex-fuel) has remained flattish despite an increase in R.O.E of around 24% YOY.
We intend to strengthen our Balance sheet by bringing down the debt burden by around $ 400 mio during the financial year through various initiatives.
We have completed Sale/ Sale and Lease back of 2 aircraft and 2 engines in Q1 FY13. During the second quarter, we intend to complete transactions for another 8 – 9 narrow body aircraft. This has/ will help in reducing on balance sheet debt and release cash.
Our focus on ancillary revenues has started to show improved results. Initiatives relating to passenger and non passenger ancillaries will start forming a large part of our top line in the next few quarters, by when we plan to increase our ancillary revenues per passenger by 100% of what we are making today.
About Jet Airways: Jet Airways currently operates a fleet of 103 aircraft, which includes 10 Boeing 777-300 ER aircraft, 12 Airbus A330-200 aircraft, 61 next generation Boeing 737-700/800/900 aircraft and 20 modern ATR 72-500 turboprop aircraft. With an average fleet age of 6.11 years, the airline has one of the youngest aircraft fleets in the world. Flights to 74 destinations span the length and breadth of India and beyond, including Abu Dhabi, Bahrain, Bangkok, Brussels, Colombo, Dammam, Dhaka, Doha, Dubai, Hong Kong, Jeddah, Kathmandu, Kuwait, London(Heathrow), Milan, Muscat, New York (both JFK and Newark), Riyadh, Sharjah, Singapore and Toronto.
About JetKonnect: A consolidation of the erstwhile JetLite and Jet Airways Konnect brands, the new JetKonnect service is a dedicated product designed to meet the needs of the low fare segment. JetKonnect will also offer guests a Premiere service on certain select routes. With its mixed fleet of Boeings and ATR aircraft and 400 daily flights connecting 56 destinations across India, JetKonnect provides more flexibility and choice to its guests, making it India’s largest low fare brand. JetKonnect’s convenient schedules, reliable service and low fares promise to bring greater value and a seamless flying experience to our customers. Jet Airways and JetKonnect have a combined fleet strength of 121 aircraft, and operate over 620 flights daily.
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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