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Aviation
Passenger growth to moderate, supply cuts by Kingfisher Airlines
(KFA) and Air India (AI) to bode well for other private players
Domestic passenger traffic is expected to witness an average 12% YoY
growth for Q3FY12 on account of peak season. However, the same is
expected to moderate due to last year’s high base effect. Load factors
for the quarter to remain healthy over 78% due to peak season and
supply cuts by two major carriers KFA & Air India. This would help other
carriers like Jet and Spicejet to improve their market share. With lesser
supply and peak season, revenue per passenger is also expected to
improve by 5% QoQ for Q3FY12E. Overall, we expect our I-direct
aviation universe to report revenue growth of 12.2% YoY, 4.1% QoQ.
Margins to remain in negative territory due to weakening of rupee
Although improvement in load factor would help in driving yields
upwards, a sharp depreciation in the rupee v/s the US dollar is likely to
weigh down on fuel and other operating expenses. This in turn would
have negative impact on operating margins. Average fuel prices have
increased by 6.5% QoQ to |.63,997 per kl. While rupee has depreciated
by 11% QoQ. Considering this, we expect overall aviation universe –ve
operating margin of 7.5% for the quarter.
Net loss to remain high, reversal of MTM loss may bring positive
surprise
We expect I-direct universe’s net loss of |.1161 crore. However, reversal
of MTM loss due to relaxation in accounting guidelines provided by the
ministry of corporate affairs on foreign currency loans may bring
positive surprise
Exhibit 6: Company specific view
Company Remarks (Q3FY12)
Jet Airways Revenues to grow by 16.0% sequentially due to ~12% rise in pax traffic and ~5%
rise in average yields. Market share to improve sequentially by 60 bps due to cut
back in supply by KFA. Margins to take a hit due to weak rupee. Reversal of MTM
loss may bring postive surprise in the bottomline.
Spicejet SpiceJet's revenues are expected to grow by 34.4% in Q3FY11E (higher than other
airlines in our coverage) due to increase in the capacity. However margins are
expected to remain negative due to rising fuel prices and other operating costs due
to weakening of rupee
Kingfisher KFA will report revenue de-growth of 15.2% YoY due to flights cancellations. Its
market share is likely to go down to 14.6% from 18.7% reported in the last quarter.
Despite cut down in size, loss is expected to remain at elevated level on account of
higher operating costs
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Aviation
Passenger growth to moderate, supply cuts by Kingfisher Airlines
(KFA) and Air India (AI) to bode well for other private players
Domestic passenger traffic is expected to witness an average 12% YoY
growth for Q3FY12 on account of peak season. However, the same is
expected to moderate due to last year’s high base effect. Load factors
for the quarter to remain healthy over 78% due to peak season and
supply cuts by two major carriers KFA & Air India. This would help other
carriers like Jet and Spicejet to improve their market share. With lesser
supply and peak season, revenue per passenger is also expected to
improve by 5% QoQ for Q3FY12E. Overall, we expect our I-direct
aviation universe to report revenue growth of 12.2% YoY, 4.1% QoQ.
Margins to remain in negative territory due to weakening of rupee
Although improvement in load factor would help in driving yields
upwards, a sharp depreciation in the rupee v/s the US dollar is likely to
weigh down on fuel and other operating expenses. This in turn would
have negative impact on operating margins. Average fuel prices have
increased by 6.5% QoQ to |.63,997 per kl. While rupee has depreciated
by 11% QoQ. Considering this, we expect overall aviation universe –ve
operating margin of 7.5% for the quarter.
Net loss to remain high, reversal of MTM loss may bring positive
surprise
We expect I-direct universe’s net loss of |.1161 crore. However, reversal
of MTM loss due to relaxation in accounting guidelines provided by the
ministry of corporate affairs on foreign currency loans may bring
positive surprise
Exhibit 6: Company specific view
Company Remarks (Q3FY12)
Jet Airways Revenues to grow by 16.0% sequentially due to ~12% rise in pax traffic and ~5%
rise in average yields. Market share to improve sequentially by 60 bps due to cut
back in supply by KFA. Margins to take a hit due to weak rupee. Reversal of MTM
loss may bring postive surprise in the bottomline.
Spicejet SpiceJet's revenues are expected to grow by 34.4% in Q3FY11E (higher than other
airlines in our coverage) due to increase in the capacity. However margins are
expected to remain negative due to rising fuel prices and other operating costs due
to weakening of rupee
Kingfisher KFA will report revenue de-growth of 15.2% YoY due to flights cancellations. Its
market share is likely to go down to 14.6% from 18.7% reported in the last quarter.
Despite cut down in size, loss is expected to remain at elevated level on account of
higher operating costs
Source: Company, ICICIdirect.com Research
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