Naresh Goyal-owned Jet Airways, which accounts
for a share of 27.9 per cent of the Indian aviation market, on Friday stumped
the street, as it posted a profit of Rs 36 crore for the quarter ended June.
This follows five quarters of losses.
Broking houses had estimated the airline
would post a loss of about Rs 150 crore
The profit resulted from an increase in other
income, which stood at Rs 124 crore, against Rs 40 crore in the year-ago
period. This included profit on sale and leaseback of aircraft amounting to Rs
52 crore. The company also benefited from growth in passenger numbers and an
increase in yields. This helped the company offset the negative impact of the
rupee’s depreciation against the dollar, high aviation turbine fuel (ATF) costs
and foreign loans.
Chief Executive Officer Nikos Kardassis said, “Despite having a natural hedge because of our US dollar denominated-earnings, we had to recognise foreign exchange losses of Rs 17,030 lakh ($30.6 million) for the quarter on account of such exchange rate fluctuation.”
He added Jet planned to strengthen its balance
sheet by reducing the debt burden by about $400 million during the financial
year through various initiatives. “We have completed the sale/sale and
leaseback of two aircraft and two engines in the first quarter of 2012-13.
During the second quarter, we intend to complete transactions for another eight
to nine narrow-bodied aircraft. This would help reduce balance sheet debt and
release cash,” Kardassis added.
Though crude oil prices have come off the highs
of about $120 a barrel and now stand at $100-$105 a barrel, this has not helped
much due to the depreciation of the rupee, which rose from 24.4 per cent in the
first quarter of 2011-12 to Rs 55.6 in the first quarter of 2012-13. This had
also put pressure on dollar-denominated costs, said a company statement.
The airline’s performance in the quarter has put
worries regarding the aviation sector’s performance to rest, at least for now.
Jet Airways’ stock on Friday closed 0.69 per cent higher at Rs 374 on the
Bombay Stock Exchange.
Goyal welcomes FDI, says open to equity dilution
Jet Airways Chairman Naresh Goyal has welcomed the government’s proposal to allow foreign airlines to invest in India. Goyal said he was open to diluting his own equity in the airline. Goyal holds 80 per cent in the airline through Tailwinds Limited, a foreign-registered company. He has been seen as a strong opponent of foreign direct investment (FDI) in aviation.
Jet Airways Chairman Naresh Goyal has welcomed the government’s proposal to allow foreign airlines to invest in India. Goyal said he was open to diluting his own equity in the airline. Goyal holds 80 per cent in the airline through Tailwinds Limited, a foreign-registered company. He has been seen as a strong opponent of foreign direct investment (FDI) in aviation.
On the sidelines of the company’s annual general
meeting in Mumbai on Friday, Goyal said Jet Airways was an Indian company and
he was a non-resident Indian, hinting the government’s norms on allowing FDI in
aviation did not debar his airline from seeking a strategic partner.
On equity dilution, he said, “So far, as it
stands, we will be controlling. If the sentiment improves and the overall
situation improves, I will have an open mind to dilute, but have control over
the company.” He, however, clarified he wasn’t immediately seeking a foreign
airline partner.
“Today, I do not need (FDI). Tomorrow I may
need. There is nothing permanent in business,” he said.
Goyal said the direct import of aviation fuel
being pursued by other airlines was not practical, as oil companies were not
sharing infrastructure. He added the current yields would sustain and lean
passenger growth was a temporary phenomenon.
Jet Airways has a debt of $2.4 billion and is
looking to repay about $400-500 million through sale and leaseback deals. The
airline would also add new routes in the Gulf sector. However, it wouldn’t add
any international destination.
Jet Airways’ fund requirement for this year
stands at about $180million, chief executive officer Nikos Kardassis said.
“This is only to improve the balance sheet, so that the debt to equity ratio
improves and our interest cost comes down,” Goyal said. So far, the company has
not succeeded in raising cash through equity shares or foreign currency
convertible bonds.
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