Financial Daily from THE HINDU group of publications
Sunday, Apr 30, 2006
Financial Daily from THE HINDU group of publications Sunday, Apr 30, 2006 |
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Corporate Results
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Airlines Logistics - Financial Performance Jet Air net up 15 pc; to pay Rs 6 Our Bureau
MR NARESH GOYAL (left), Chairman, Jet Airways, and Mr Wolfgang Prock Schauer, CEO, at a press conference to announce the company's results in Mumbai on Saturday. — Shashi Ashiwal
Mumbai , April 29 Steep gain in other income helped Jet Airways (India) Ltd post 15.32 per cent rise in net profit for 2005-2006, to Rs 452.04 crore from the previous corresponding Rs 391.99 crore. Net income from operations was up 31.25 per cent at Rs 5693.73 crore (Rs 4338.01 crore for the year ago period). The board has recommended dividend of Rs 6 per equity share. At a press briefing, Mr Naresh Goyal, Chairman, said that a feasibility study would be done to start a cargo airline. In Q4, Jet had 70.76 per cent increase in net profit to Rs 227.12 crore (Rs 133 crore) on 35.06 per cent growth in net income to Rs 1625.30 crore (Rs 1203.36 crore). Total expenditure for Q4 and full year rose 74.54 per cent to Rs 1439.58 crore and 52.37 per cent to Rs 4765.20 crore, respectively. Results gained from other income, up 1688.36 per cent for the quarter and 437.66 per cent for the fiscal, courtesy Rs 270.64 crore-profit on sale and lease back of five aircraft. Without it, net profit would have been lower than before. "Fuel price continues to be the single biggest challenge," Mr Raja Parthasarathy, Executive Vice-President (Finance), said. Higher fuel rate forced an additional $ 22 million for the quarter and $ 67 million through the year. Following RBI approval, Jet hedged for 10,000 barrels of fuel uplifted abroad. It totally consumes 300,000 barrels per month. It plans to hedge full overseas uplift or 10 per cent of overall fuel consumption. Fifty per cent of seats are going at discounted rates. Given pressure on yields, Mr Victoriano P. Dungca, Director, said, the only way to improve EBITDA is to increase load factor through greater control in reservations and reduced no-shows at the airport. While fuel costs have to be endured potential exists to cut other costs and enhance efficiencies like higher utilisation of aircraft. Rising fuel cost has made airport infrastructure critical. Aircraft kept circling (it burns more fuel) and delays, add to operating costs. From excess capacity few quarters ago the industry has moved to 60-70 per cent load factor with 50 per cent traffic rise in the last three months. "That is tremendous growth. It is like we are beginning in the industry and yet we are not," he said. End-May, Jet would conclude a $500-million FCCB issue to part finance purchase of 30 aircraft for $2.5 billion. At a later date, there would be a $ 300 million domestic equity raising exercise. It plans to cull 3-5 planes every year with receipts used to fund fleet renewal. "That's why the role of other income in FY06 results should not be seen as a one-off development. It will contribute annually," Mr Parthasarathy said. Against Sahara Airline's enterprise value of $500 million, Jet had agreed to pay its owners $444 million. This does not imply reduced valuation, Mr Dungca said. It reflects the difference between "buying the company and buying the shares." Following the owner's request for some payment, Jet paid Rs 500 crore, secured fully on Sahara's outstanding shares and the personal guarantee of its owner, Mr Subroto Roy. If the deal does not go through, Mr Roy returns the money or Jet sells the shares. Jet has signed a management consultancy agreement with Sahara; Lufthansa engineers have been brought in to inspect planes, spares and maintenance processes. `` Eventually we would like to merge the two airlines,'' Mr Dungca said, the integration process taking 12-18 months.
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