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Weak 1QFY12 results
Jet reported a pre-exceptional and taxes loss of Rs2.8bn during 1QFY12
against a loss of Rs404m in 1QFY11, with yields undershooting fuel cost
increases. Ebitdar margins declined 1110bps YoY and 130bps QoQ at
9.3%. Results were weaker than expected with sequential yield
improvements being lower than expected. Performance through 2Q will
remain under pressure and yields will only improve in 3Q as the demand
supply situation turns favourable in the peak season. Maintain O-PF.
Jet 1QFY12: another weak quarter
Jet’s 1QFY12 results showcased the challenging operating environment. Domestic
seat factors were at 75% (79% in 1Q11) while yields were up 10% YoY and 6%
QoQ with price aggression moderating somewhat against 4Q. Fuel costs rose 57%
YoY (+27% QoQ) while operating expenses rose 21% YoY. Ebitdar margins were
6.7%, down more than 1200bps YoY but up 420bps QoQ, leading to negative
Ebitda for the quarter. The international business saw yields increase 6%YoY and
3% QoQ while loads remained above 80%. Revenues increased 22% YoY (+6%
QoQ) while fuel and selling costs increased at 57% and 37% YoY respectively
(20% and 8% QoQ). Ebitdar margins declined 1030bps YoY and 500bps QoQ to
11.2%. The high fuel prices and weak yield performance caused overall Ebitda
margins to drop to 3.4% and Jet report a pre tax/exceptionals loss of Rs2.76bn.
Looking ahead, the company expects to add 6 aircraft in domestic and 2 B777’s to
return in international in FY12. Given that 2Q is seasonally the weakest quarter
and competitive pressures remain high, yields are unlikely to recover in H1. The
demand supply situation may turn favourable in the peak season in 3Q.
JetLite: performance remains weak
JetLite’s performance in 1QFY12 remained weak with yields dropping 11% YoY
(+4% QoQ) while load factors dropped 290bps YoY (+390bps QoQ) as it was
more vulnerable to the aggressive price cuts by competitors, leading a YoY
revenue decline of 10% (+4% QoQ). Ebitdar margins remained negative at -3.9%
(+250bps QoQ) and normalised loss stood at Rs912m (Rs59m profit in 1QFY11).
H2 remains key for FY performance
Debt for Jet stood at Rs132bn while cash stood at Rs5.1bn and repayments for the
year would be ~Rs10-11bn. The company hopes to complete the BKC land deal as
well as a sale & leaseback of 4 737s in the current quarter given the developments
in the Sahara case. Given the weak outlook for 2Q, performance for the full year
will remain back ended and the demand trends later in the year will be the key
driver for profitability. Given the continuing momentum in passenger growth, the
outlook seems reasonably. However, oil prices remain a major risk (our forecasts
factor in jet fuel assumption to US$108-111 for FY12-13, broadly consistent with a
crude oil price of $97-100). We have retained our forecasts and valuation for now but
will watch yield and pax trends in the coming months ahead of the peak season. O-PF.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Weak 1QFY12 results
Jet reported a pre-exceptional and taxes loss of Rs2.8bn during 1QFY12
against a loss of Rs404m in 1QFY11, with yields undershooting fuel cost
increases. Ebitdar margins declined 1110bps YoY and 130bps QoQ at
9.3%. Results were weaker than expected with sequential yield
improvements being lower than expected. Performance through 2Q will
remain under pressure and yields will only improve in 3Q as the demand
supply situation turns favourable in the peak season. Maintain O-PF.
Jet 1QFY12: another weak quarter
Jet’s 1QFY12 results showcased the challenging operating environment. Domestic
seat factors were at 75% (79% in 1Q11) while yields were up 10% YoY and 6%
QoQ with price aggression moderating somewhat against 4Q. Fuel costs rose 57%
YoY (+27% QoQ) while operating expenses rose 21% YoY. Ebitdar margins were
6.7%, down more than 1200bps YoY but up 420bps QoQ, leading to negative
Ebitda for the quarter. The international business saw yields increase 6%YoY and
3% QoQ while loads remained above 80%. Revenues increased 22% YoY (+6%
QoQ) while fuel and selling costs increased at 57% and 37% YoY respectively
(20% and 8% QoQ). Ebitdar margins declined 1030bps YoY and 500bps QoQ to
11.2%. The high fuel prices and weak yield performance caused overall Ebitda
margins to drop to 3.4% and Jet report a pre tax/exceptionals loss of Rs2.76bn.
Looking ahead, the company expects to add 6 aircraft in domestic and 2 B777’s to
return in international in FY12. Given that 2Q is seasonally the weakest quarter
and competitive pressures remain high, yields are unlikely to recover in H1. The
demand supply situation may turn favourable in the peak season in 3Q.
JetLite: performance remains weak
JetLite’s performance in 1QFY12 remained weak with yields dropping 11% YoY
(+4% QoQ) while load factors dropped 290bps YoY (+390bps QoQ) as it was
more vulnerable to the aggressive price cuts by competitors, leading a YoY
revenue decline of 10% (+4% QoQ). Ebitdar margins remained negative at -3.9%
(+250bps QoQ) and normalised loss stood at Rs912m (Rs59m profit in 1QFY11).
H2 remains key for FY performance
Debt for Jet stood at Rs132bn while cash stood at Rs5.1bn and repayments for the
year would be ~Rs10-11bn. The company hopes to complete the BKC land deal as
well as a sale & leaseback of 4 737s in the current quarter given the developments
in the Sahara case. Given the weak outlook for 2Q, performance for the full year
will remain back ended and the demand trends later in the year will be the key
driver for profitability. Given the continuing momentum in passenger growth, the
outlook seems reasonably. However, oil prices remain a major risk (our forecasts
factor in jet fuel assumption to US$108-111 for FY12-13, broadly consistent with a
crude oil price of $97-100). We have retained our forecasts and valuation for now but
will watch yield and pax trends in the coming months ahead of the peak season. O-PF.
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