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Tuesday October 27, 06:50 PM
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Jet Airways sees yields, demand up in 6 mnths
MUMBAI (Reuters) - Jet Airways Ltd, India's No.2 airline by market share, is confident of demand and yields per seat rising in the next six months, after it reported a wider quarterly loss on Tuesday.
Indian airlines are reeling under mounting losses as demand waned in the wake of the financial crisis last year and high operating costs force them to look at fund raising options.
The company said it expected yield improvements, given the peak season as well as premium demand revival, in the next few quarters. Its focus would be on maximizing revenues through higher seat factor levels, it said in a statement.
"The current capacity-demand situation is improving, capacity growth has been under check, while the demand continues to grow at a healthy pace," Executive Director Saroj Datta told reporters in a conference call.
"This coupled with a stable business scenario and steady GDP growth is an ideal environment for yields to go up from current levels. Further impact of our cost initiatives will start to show full blown results in the next few quarters," he said.
Jet's Sept. quarter net loss widened to 4.07 billion rupees from 3.8 billion rupees a year ago.
Reduction in capacities through network rationalisation led to lower revenues while a 5-day strike by its pilots in September caused a revenue loss of $16 million, Datta said.
The firm has a net debt of $3.1 billion, Datta said.
Jet's overall capacity fell 17.9 percent during the quarter from a year earlier, he said.
FUND RAISING
Jet has obtained board and shareholder approval for raising up to $400 million.
With a net debt of $3.1 billion on its books, about $500 million of that for its unit Jetlite, and a debt to equity ratio of 4 to 1 at the end of the September quarter, the company has to raise funds to deleverage its balance sheet.
Datta said Jet had applied for a government clearance to raise funds and a meeting of the relevant regulatory authority was scheduled for Oct. 30.
The funds raised would be used to reduce debt, he said.
Shares in Jet worth $747 million, fell 9.05 percent to 365.80 rupees while the main index fell 2.3 percent. Its shares have nearly doubled so far this year, compared with a 73 percent rise in the main index.
(Reporting by Janaki Krishnan & Aniruddha Basu; Editing by Jarshad Kakkrakandy)
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