Jet Airways, the country’s leading private airline, on Tuesday reported a 93.81 per cent dip in its net profit to Rs 28 crore for the year ended March 31, 2007. This is despite 22 per cent growth in revenue to Rs 7,400 crore, and its international operations becoming profitable in the last quarter.
The airline would have reported a net loss of Rs 183 crore but for the profit of Rs 211.07 crore ($48 million) it earned through the sale and leaseback of four Boeing aircraft. Jet posted pre-tax losses of around $40 million, or Rs 174 crore, on its international operations.
Airlines do sale and leaseback deals to show profits or lower losses. They book profits by leveraging the difference between the market value of the aircraft and its book value. Last financial year too, Jet made $60 million by this method.
Net profit for the quarter ended March 2007 declined to 61.23 per cent to Rs 88 crore despite a 23.2 per cent increase in operating revenue to Rs 1,978 crore. But the results were better than the previous three quarters during which the airline had totted up losses of Rs 60 crore, due to its new international operations.
The good news is that its international operations are stabilising. Helped by higher seat factors on key routes and lower fuel costs, Jet earned a pre-tax profit of Rs 3 crore for the quarter ended March 2007 against a loss of Rs 44 crore in the corresponding quarter last year. But this could be short-lived as Jet plans to soon add new routes and start flying to the US, Canada and the Middle East.
Jet’s domestic operations have remained profitable despite a bloodbath in the market. In fact, Jet managed to even improve its yields by 5 per cent to Rs 5,500. The Jet Airways’ scrip was up marginally (0.69 per cent) to Rs 808.50 on the Bombay Stock Exchange on Tuesday
‘‘We hope the consolidation in the market will lead to more rational pricing and better yields,’’ said Jet CEO Wolfgang Prock-Schauer. But the capacity addition in the next two quarters—airlines like Indigo, Kingfisher and Air Deccan will keep adding more planes—will ensure that yields remain under pressure.