Jet may best Kingfisher at beating slump

New Delhi: India’s biggest airline by passengers, Jet Airways (India) Ltd, is better placed to weather the current slump in aviation than its closest private sector rival Kingfisher Airlines Ltd, analysts said.
To recover costs in the first half of the current fiscal year to March, Kingfisher needed to fill 96% of seats on its domestic flights, compared with 82% for Jet, said a report by financial services firm CLSA Asia-Pacific Markets released on Thursday.
Kingfisher and Jet—which together make up for 60% of the passenger market share in India—only managed to fill 60% and 68%, respectively, of their seating capacity from 1 April to 30 September, according to averages calculated by Mint on official data.
Jet reported losses of Rs236.18 crore and Kingfisher posted Rs626 crore in losses for the three months to December.
CLSA analysts Anirudha Dutta's and Prakhar Sharma's conclusions were based on the fact that in the first half of this fiscal, Jet’s domestic revenues were 37% higher and profitability was superior to Kingfisher due to a higher share of full-service carrier operations, while the higher proportion of low-cost operations in Kingfisher’s operations dragged it down.
Kingfisher acquired low-cost carrier Deccan Aviation Ltd and Jet took over budget carrier Jet Lite (India) Ltd, both in 2007. Jet now operates 480 flights a day with 111 aircraft and Kingfisher has 400 daily flights with 76 aircraft. Both the fleets include a few aircraft the firms have either grounded or leased out.
As per Jet’s management, 85-90% of the debt is towards purchase of aircraft at interest rates of 5-7%,” they said in the report.
Based on this, the analysts estimated the enterprise value of Jet at Rs237 billion, 73% higher than Kingfisher’s enterprise value of Rs137 billion.
06/02/09 Tarun Shukla/Livemint

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Categories: Jet Airways Feb 2009, kingfisher Feb 2009