Jet's Q4 net dips 61% as domestic capacity soars

MUMBAI: Under severe pressure from a rise in domestic capacity, Jet Airways posted a 61% fall in net profit to Rs 88 crore for the quarter ended March 2007. “The airline chose to combine flights and cut operations on several routes rather than make losses through the operations during the period,” the airline’s chief executive officer Wolfgang Prock-Schaeur said on Tuesday.

It also continued to sell about 70% of its total seats at a discount at what are known as ‘check fares’, realising full-fares only for the remaining 30%. However, in a significant change from the earlier quarters, Jet’s international operations turned profitable.

The Mumbai-based airline has notched up a full-year profit of Rs 28 crore down 94% from Rs 452 crore in 2006-7. Though seven new planes were added to the fleet during the year, there was very little capacity addition on the domestic routes, as most of the aircraft were either replacements for or deployed on international routes.

Commenting on the prospects for this quarter, the Jet CEO said the environment continues to be challenging, though capacity addition by other airlines has declined significantly. He also said the airline has no plans to make any other domestic acquisition after its buyout of Air Sahara early this year.

Beginning August this year, Jet will start flying to New York, Toronto, Johannesburg, Nairobi, Hong Kong and Dubai, launching a new flight almost every month from Mumbai and Delhi.

“Every new long-haul route takes about 12 to 18 months before it turns profitable,” Mr Prock-Schaeur said. To serve the expanded network, Jet will take deliveries of 16 wide-bodied planes in the next one year.

Bookings on the Mumbai- New York sector have begun and are encouraging, he said. The airline is focusing on business class traffic and has corporate deals with about 1,300 corporates, including multinationals. Its frequent flier programme, Jet Privilege, has about a million members.

Meanwhile, earnings per share (EPS) for the airline for the quarter fell 61.27% to Rs 10.19 compared with the corresponding quarter a year ago. The board on Tuesday approved a plan to raise $400 million as well as a dividend of 60% or Rs 6 per share. The Jet Airways stock, which has been rising for the past fortnight, gained 5.5% on
the BSE to close at Rs 808.50 on Tuesday.