Wednesday, September 02, 2015

Cut in ATF price to fuel aviation sector profit

Mumbai: A 40 per cent year-on-year drop in jet fuel's price will lead to improved operating profits for domestic airlines. On Monday midnight, state oil companies cut the price by 11.7 per cent, the sharpest cut in six months. The price is revised monthly.
Lower aviation turbine fuel prices have given a breather to airlines and helped offset the negative impact of a weakened rupee. About 25-30 per cent of airline costs (excluding fuel) are dollar-denominated.
For the first quarter of 2015-16, the fuel bill of Jet Airways and SpiceJet was down by 20 per cent and 53 per cent, respectively, from a year before. Sharper with SpiceJet due to a capacity cutback.
Fuel now accounts for 27 per cent of Jet's operating expenses from 36 per cent a year earlier. With SpiceJet, it is now 34 per cent of expenses from 43 per cent in the first quarter of last year.
Both the listed airlines also reported an operating profit in the January-March quarter, driven by the fuel cost benefit. Jet made a profit on operations (before other income, exceptional items and interest cost) of Rs 162 crore in the June quarter as against a Rs 117 crore loss in the same quarter last year. SpiceJet made a Rs 70 crore profit against a loss of Rs 104 crore earlier.
02/09/15 Aneesh Phadnis/Business Standard
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