High prices, competition may hurt airline results

New Delhi: India’s three listed airlines may have made losses in the quarter ended June, owing to high jet fuel prices, excess capacity and fierce competition for passengers, analysts said. Two of the carriers made profits in the last fiscal.
The quarter is considered the second best for domestic airlines, next to the October-December period, which is dominated by the holiday season.
“On the operating level front, (it’s) not so good a quarter for the airlines sector,” said Rashesh Shah, analyst at Mumbai-based brokerage firm ICICI Securities Ltd. “All three companies are going to report a loss on an operating level even though the top line will continue to grow healthy.”
Listed carriers Jet Airways (India) Ltd, Kingfisher Airlines Ltd and SpiceJet Ltd together command a 60% market share.
Jet Airways is estimated to have made a loss of Rs335.8 crore, Kingfisher Airlines a loss of Rs377.3 crore and SpiceJet a loss of Rs75.5 crore, Shah said.
This compares with a profit of Rs8.4 crore for Jet Airways, a profit of Rs55.22 crore for SpiceJet and a loss of Rs187.35 crore for Kingfisher in the year-ago period.
Jet Airways is expected to have lost Rs500 crore “driven by the sustenance of high crude prices (brent around $120) over the entire quarter” despite an “overall revenue growth at 13%”, said Mumbai-based IDFC Securities Research, which does not track Kingfisher and SpiceJet.
07/07/11 Tarun Shukla/Live Mint

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Categories: Indian Aviation- In General Jul 2011