Wednesday, February 2, 2011

Jet Airways Net Profit Up 11%

MUMBAI – Jet Airways (India) Ltd. Wednesday posted an 11% increase in third quarter net profit, missing market expectations as rising sales were offset by higher tax expenses.

India's biggest airline by market share posted a net profit of 1.18 billion rupees ($26 million) in October-December, compared with 1.06 billion rupees a year earlier.

Sales rose 20% to 32.62 billion rupees from 27.23 billion rupees, but the airline's profit was dragged down on a tax expense of 996.4 million rupees, against just 500,000 rupees a year earlier.

It didn't specify what led to the rise in taxes.

The average estimate in a poll of six analysts was for Jet Airways to post a net profit of 2.78 billion rupees on sales of 36.45 billion rupees.

The carrier posted a 24.2% earnings before interest, taxes, depreciation, amortization and lease rentals margin during the quarter. It didn't immediately give a comparative figure.

"The EBITDAR margin is more or less in line with our expectations, but the taxes took us by surprise, said Mahantesh Sabarad, a Mumbai-based analyst with Fortune Equity Brokers.

"The good thing is that Jet's tax expense primarily comprises of deferred tax so there is no cash outgo," he added.

The airline's shares fell on the lower-than-expected results. The stock closed down 1.64% at 503.15 rupees on the Bombay Stock Exchange. The benchmark index ended 0.38% lower.

Still, the company's improvement in operating performance reflects a recovery in the aviation sector, long out of the throes of the global downturn in 2008 and 2009. Rising personal income levels and a growth in corporate activity have encouraged more Indians to fly in the past year.

Airlines, especially Jet Airways and Kingfisher Airlines Ltd., have in turn raised ticket prices over the last several quarters to improve margins.

Jet Airways said it flew 3.94 million passengers during the just-ended quarter, up 15% year-on-year. It had a domestic load factor of 77% during the quarter compared with 75% a year earlier.

The airline managed to fill 80% seats on average--a number it has maintained over the last few quarters--on its overseas flights, compared with 82.5% a year earlier.

The company is expected to have load factors of 76% on its domestic flights and 80% on international operations in the fourth quarter, said Senior Vice President M. Shivkumar on news channel CNBC-TV18.

Jet Airways spent 10.97 billion rupees on fuel--its biggest operating expense--up 24% from the year earlier quarter. Total expenditure climbed 17% to 30.72 billion rupees


NEHA JAIN                                                                                                                

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