Less turbulent skies ahead for Jet Airways

Mumbai: Jet Airways, the country’s largest airline, has been a weak performer on the bourses for some time, losing nearly 70 per cent of its value in the past nine months. A steep jump in costs and lack of pricing power has translated into increasing losses in the quarter ended September. However, rising fares on higher demand, a drop in competitive intensity and a cost-cutting exercise are likely to help it improve its financials.
In a conference call after the company’s results were announced, the management indicated onset of the peak season had led to price increases of 18-20 per cent across the board for the sector. This, coupled with muted supply, should keep revenue robust for the current quarter as well as the second half of the financial year, which contributes about 55 per cent of its top line. It has also planned to reduce its debt pile of Rs 14,000 crore from sale and lease-back of planes (Rs 750-1,500 crore) and a deal with Godrej Property for the Bandra Kurla Complex in Mumbai (Rs 500 crore) over the next few quarters.
However, despite these gains, the company is unlikely to make profits in the current financial year, say analysts. The stock saw extreme volatility falling 11 per cent intra-day on Monday, but recovered to close at Rs 260, down two per cent over Friday’s close.
15/11/11 Ram Prasad Sahu/Business Standard

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Categories: Jet Airways Nov 2011