NEW DELHI: India’s Jet Airways reported its worst quarterly loss on record, squeezed by high fuel costs and a weaker local currency, as it awaits funds from the agreed sale of a stake to Abu Dhabi’s Etihad.
Jet, which has lost money in the past six years, said yesterday it was awaiting approvals from some regulators for the Etihad deal, without specifying. The agreement, struck to help Jet break out of a pattern of losses in India’s airline business, won the Indian cabinet’s approval earlier this month.
An economic slowdown meant lower yields, a gauge of the average fare paid per kilometre flown, Mumbai-based Jet said in a statement. A fall in the value of India’s rupee currency, the high cost of fuel and an increase in fees at some airports also led to the loss, it added.
The net loss for Jet, India’s second-biggest carrier by domestic market share, was Rs8.91bn ($145m) for the three months ended September 30, compared with a net loss of Rs997m a year earlier.
The loss is the biggest ever for Jet, the first of India’s airlines to publish earnings for the quarter, according to data compiled by Thomson Reuters from company filings. It reported a net loss of Rs7.1bn in the September quarter of 2011.
Despite the sector’s current problems, deep-pocketed foreign players such as Singapore Airlines, AirAsia Bhd and Etihad have been lured to the country by longer-term growth prospects. The Indian government expects passenger air traffic to almost triple during the current decade.
Etihad’s $334m deal for a 24 percent stake in Jet is the first investment by a foreign carrier in an Indian airline since the country last year changed rules to help channel capital into a sector.
But high costs of jet fuel and aggressive pricing as competition increases will likely hurt airlines’ finances in the coming quarters, analysts say. Jet paid eight percent more for fuel from a year earlier, it said.
Income from operations rose marginally to Rs37.88bn in the quarter ended September from Rs37.55bn a year earlier, Jet said, while expenses jumped nearly a fifth to Rs48.51bn. Some of its aircraft sat idle, accounting for Rs1.2bn in losses.