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Jet Springs Surprise

The airliner delivered a Rs 53 crore profit figure that analysts had not predicted

Far from a nose-dive into the ground, something that was being widely anticipated, India's premier private sector airline, Jet Airways, unveiled figures that show it may be flying low, yet its direction is still skywards.

The Naresh Goyal-led aviation biggie was not expected to announce any profit after undergoing enough turbulence to ground it permanently -- from rising global oil prices, falling number of flyers, rising ticket costs to inability to retrench employees due to government pressure, in addition to the carrying of excess baggage in terms of the Sahara Airways buy.

The airliner has left all of that behind it to fly into a smooth piece of sky by announcing that it has made a Rs 53 crore profit in the fourth quarter, ended March 2009.

The reason ascribed to it was the drop from heights of aviation fuel as well as its Rs 350 crore Cenvat credit. That this profit figure is special can be surmised from the fact that last year’s same period results indicated a Rs 221 crore loss.

However, that is not what the airliner is looking to highlight. According to it, the reason for the profit showing through is the great cost-cutting exercise that it initiated once it became clear that oil prices are headed Northward and flyers Southward. In a sense, the global slowdown has both helped it and harmed it: due to the global scale recession, there was hardly any demand for oil in developed and emerging worlds and that caused a slump in the rates the company was paying for sourcing oil; however, as recession bit into the global and domestic economy it caused tremendous pain on the individual level too from job losses, pay-cuts and worse, leading companies ditching the habit of flying their executives on business trips, while on a personal level, it became increasingly difficult to persuade anyone to fly on vacations or other family affairs with a fear of losing employment hanging fire over them, not mention the sky-high pricing.

According to its CEO, W P Schauer, “Leasing out surplus aircraft, postponing aircraft deliveries, cutting out non-profit-making sectors has helped us tremendously in saving money.”

Of course, what added to the effect was the fact that fuel prices falling by 45 per cent helped the airline save as much as Rs 600 crore. In addition, sales had risen by 23.4 per cent from Rs 10,990.72 crore to Rs 13,448.81 crore.

Amongst all the positives, it would be important to look at some negatives too. The company has indicated that its net revenues have fallen by 16 per cent from Rs 2,687.33 crore to Rs 2,263.37 crore. Also, its loss for the year ended March 2009 jumped to Rs 961 crore as against pervious year’s Rs 653 crore.

It remains to be seen what its ostensible partner-in-bad-times, though also a bitter rival during the good times, Kingfisher Airways reports for its quarter.

Also see:
Stock Report Jet  Airways