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Aviation
ƒ Robust growth in pax traffic to continue in Q3FY11
Domestic air carriers are expected to post growth of ~23% QoQ in
passenger traffic during Q3FY11 to 14.9 millions on account of
improved economic environment and peak season. Average yield
per pax has also gone up by over 12% QoQ on limited supply of
aircrafts. With healthy load factors and improved yields compared to
the last quarter, we expect our I-direct aviation universe revenues to
grow by 25.5% YoY and 21.5% QoQ respectively.
ƒ Margins to improve despite rise in fuel costs
Average Jet fuel costs have inched up by over 10% QoQ to | 49,600
per kilo-litre. However, the same is expected to be compensated
with healthy growth in top-line. As a result, we expect overall Idirect aviation universe’s operating margin to improve to by 226 bps
YoY, 600 bps QoQ to 12.1%.
ƒ Company with strong domestic focus to report better performance
During the quarter, companies with strong domestic focus like
Spicejet is expected to deliver better results compared to its peers,
on robust growth in domestic pax traffic.
Jet Airways
Revenues to grow at 19.1% QoQ vs. last quarter's growth of 1.8% due to onset of
peak season. Domestic business (~45% of total revenue) to outperform against
international business in terms of growth. Despite better topline, OPM is expected to
improve moderarely (16.6% vs. 12.3% Q2FY11) on rising fuel prices
SpiceJet
Pax traffic and yields are expected to grow 24% and 9% QoQ. Due to robust topline
growth, the company is expected to report operating profit of | 110 crore as against
loss of | 21.6 crore last quarter. Thus, this will mitigate the negative impact of 400
bps QoQ dip in OPM due to10% increase in average fuel prices
KFA
Topline will grow by 22.2% QoQ vs. last quarter growth of (-15.7% QoQ) in Q2FY11E
on improved domestic pax traffic. With increased fleet utilisation levels on
conversion of majority of its capacity to low cost, the company is expected to report
marginally positive EBITDA
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