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Aviation
Growth in passenger traffic to moderate in Q4FY11
Domestic air carriers have witnessed a sequential decline of 4.6%
QoQ in passenger traffic during January-March 2011 on account of
the seasonality impact. Average yield per pax also declined
marginally by 3% in the first two months of Q4FY11. However, it
started inching up from March onwards to offset soaring fuel prices.
Overall, we expect yields to remain flat for the quarter. However, on
a YoY basis, the I-direct aviation universe is going to report healthy
revenue growth of 23% on strong pax traffic trend.
Higher fuel cost to take a toll on margins
Average jet fuel costs have inched up by over 18% QoQ to | 55,300
per kilolitre and players have been unable to pass on this burden
fully onto passengers due to a sequential decline in the passenger
traffic. As a result, we expect the operating margin of the overall Idirect
aviation universe to decline by 160 bps YoY and 1100 bps
QoQ to 2.3%.
Jet Airways to report better operating result among peer group
With nearly 55% of revenues coming from international operations,
we expect Jet Airways to report positive EBITDA on account of its
presence in the high margin international segment.
Exhibit 6: Company specific view
Company Remarks
Jet Airways Revenues will decline sequentially due to seasonality and marginal decline in pax
yields. Domestic business (~45% share) will continue to outperform vs.
international business in terms of revenue growth. EBITDA is expected to remain
positive due to healthy margin in the international segment
SpiceJet Pax traffic and yields are expected to decline 0.4% and 6.0% QoQ. Also, with an 18%
QoQ rise in average fuel price, it is expected to report negative EBITDA margins of -
0.3% vs.13.7% reported in the last quarter
KFA KFA will report a minimal drop in its topline sequentially vs. other airlines on account
of the recovery of seven aircraft. Margins will get impacted sharply by soaring fuel
prices. However, interest cost saving of ~| 39 crore on conversion of loans into
preferential shares would help it in reducing its losses
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Aviation
Growth in passenger traffic to moderate in Q4FY11
Domestic air carriers have witnessed a sequential decline of 4.6%
QoQ in passenger traffic during January-March 2011 on account of
the seasonality impact. Average yield per pax also declined
marginally by 3% in the first two months of Q4FY11. However, it
started inching up from March onwards to offset soaring fuel prices.
Overall, we expect yields to remain flat for the quarter. However, on
a YoY basis, the I-direct aviation universe is going to report healthy
revenue growth of 23% on strong pax traffic trend.
Higher fuel cost to take a toll on margins
Average jet fuel costs have inched up by over 18% QoQ to | 55,300
per kilolitre and players have been unable to pass on this burden
fully onto passengers due to a sequential decline in the passenger
traffic. As a result, we expect the operating margin of the overall Idirect
aviation universe to decline by 160 bps YoY and 1100 bps
QoQ to 2.3%.
Jet Airways to report better operating result among peer group
With nearly 55% of revenues coming from international operations,
we expect Jet Airways to report positive EBITDA on account of its
presence in the high margin international segment.
Exhibit 6: Company specific view
Company Remarks
Jet Airways Revenues will decline sequentially due to seasonality and marginal decline in pax
yields. Domestic business (~45% share) will continue to outperform vs.
international business in terms of revenue growth. EBITDA is expected to remain
positive due to healthy margin in the international segment
SpiceJet Pax traffic and yields are expected to decline 0.4% and 6.0% QoQ. Also, with an 18%
QoQ rise in average fuel price, it is expected to report negative EBITDA margins of -
0.3% vs.13.7% reported in the last quarter
KFA KFA will report a minimal drop in its topline sequentially vs. other airlines on account
of the recovery of seven aircraft. Margins will get impacted sharply by soaring fuel
prices. However, interest cost saving of ~| 39 crore on conversion of loans into
preferential shares would help it in reducing its losses
Source: Company, ICICIdirect.com Research
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