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Revenue growth intact; lower yields higher ATF hurt PAT
• Jet Airways (Jet) reported a 14.4% Y-o-Y growth in standalone passenger revenues to `31.5bn
driven by a 10.4% Y-o-Y growth in RPKM and 3.6% Y-o-Y growth in yields (revenue/RPKM). The
8% Y-o-Y growth in cargo revenues and 14% Y-o-Y growth in other operating revenues led to a
13.4% Y-o-Y rise in total income to `39.4 bn.
• The standalone passenger load factor (PLF) declined by 150bps Y-o-Y to 77.8% as the capacity
(ASKM) grew 12.6% Y-o-Y with fleet addition. Average fleet size rose to 101 in Q3FY12 as
compared to 90.8 in Q2FY12 and 91.5 in Q3FY11.
• Fuel costs rose by 60% Y-o-Y resulting in the EBITDAR margin declining to 5.3% and the
company reporting an EBITDA loss for the second consecutive quarter. EBITDA loss stood at
`366 mn as compared to an EBITDA profit of `6.3bn in Q3FY11.
• The company reported a standalone net loss of `1.0 bn in Q3FY12, which was cushioned by a
other income and exceptional item component.
Result Highlights
Rupee impact dragged International business despite better operations
The international revenues grew by 13.9% Y-o-Y while domestic business saw a 12.7% Y-o-Y growth.
The yields in the international segment grew by 7.3% Y-o-Y as PLF stood at 79.2%. In the domestic
segment yields declined by 0.5% Y-o-Y and the PLF stood at 75.2%. The international business
witnessed its lowest EBITDA in three years with margins at 2.9% due to the rupee depreciation.
Fuel cost pressure continues to create headwinds
With the current competitive environment, yields remained low across segments even as fuel prices
continued to surge in Q3FY12. The domestic arm saw fuel cost surge 56.3% though seasonality
ensured that fuel cost as a percentage of sales fell to 41.1% (46.4% in Q2FY12). Similarly,
international fuel cost rose by 62.4% Y-o-Y resulting in fuel cost as a percentage of sales rising to
47.2% in Q3FY12 (43.8% in Q2FY12 and 33.1% in Q3FY11).
JetLite results better than Jet’s full service domestic business
JetLite’s total revenue grew by 9.7% Y-o-Y to `5.3 bn led by muted 0.7% Y-o-Y rise in RPKM coupled
with a 5.1% Y-o-Y rise in yields. The division saw a rise in yields after three consecutive quarters.
The load factor however, declined to 78.6% in Q3FY12 as compared to 82.6% in Q3FY11.
Valuation & Viewpoint
The outlook for the sector remains weak with currency headwinds and high ATF prices. However,
cash generation and debt repayment through sale-and-back and BKC land sale should reduce the
debt burden. We expect any drop in fuel prices to substantially improve the operations of the
company. The stock is currently trading at 8.4x its FY13E EV/EBITDAR; a significant discount to its
other peers. Hence, we expect the stock to be the first to benefit in the sector with any
positive change in the macro environment.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Revenue growth intact; lower yields higher ATF hurt PAT
• Jet Airways (Jet) reported a 14.4% Y-o-Y growth in standalone passenger revenues to `31.5bn
driven by a 10.4% Y-o-Y growth in RPKM and 3.6% Y-o-Y growth in yields (revenue/RPKM). The
8% Y-o-Y growth in cargo revenues and 14% Y-o-Y growth in other operating revenues led to a
13.4% Y-o-Y rise in total income to `39.4 bn.
• The standalone passenger load factor (PLF) declined by 150bps Y-o-Y to 77.8% as the capacity
(ASKM) grew 12.6% Y-o-Y with fleet addition. Average fleet size rose to 101 in Q3FY12 as
compared to 90.8 in Q2FY12 and 91.5 in Q3FY11.
• Fuel costs rose by 60% Y-o-Y resulting in the EBITDAR margin declining to 5.3% and the
company reporting an EBITDA loss for the second consecutive quarter. EBITDA loss stood at
`366 mn as compared to an EBITDA profit of `6.3bn in Q3FY11.
• The company reported a standalone net loss of `1.0 bn in Q3FY12, which was cushioned by a
other income and exceptional item component.
Result Highlights
Rupee impact dragged International business despite better operations
The international revenues grew by 13.9% Y-o-Y while domestic business saw a 12.7% Y-o-Y growth.
The yields in the international segment grew by 7.3% Y-o-Y as PLF stood at 79.2%. In the domestic
segment yields declined by 0.5% Y-o-Y and the PLF stood at 75.2%. The international business
witnessed its lowest EBITDA in three years with margins at 2.9% due to the rupee depreciation.
Fuel cost pressure continues to create headwinds
With the current competitive environment, yields remained low across segments even as fuel prices
continued to surge in Q3FY12. The domestic arm saw fuel cost surge 56.3% though seasonality
ensured that fuel cost as a percentage of sales fell to 41.1% (46.4% in Q2FY12). Similarly,
international fuel cost rose by 62.4% Y-o-Y resulting in fuel cost as a percentage of sales rising to
47.2% in Q3FY12 (43.8% in Q2FY12 and 33.1% in Q3FY11).
JetLite results better than Jet’s full service domestic business
JetLite’s total revenue grew by 9.7% Y-o-Y to `5.3 bn led by muted 0.7% Y-o-Y rise in RPKM coupled
with a 5.1% Y-o-Y rise in yields. The division saw a rise in yields after three consecutive quarters.
The load factor however, declined to 78.6% in Q3FY12 as compared to 82.6% in Q3FY11.
Valuation & Viewpoint
The outlook for the sector remains weak with currency headwinds and high ATF prices. However,
cash generation and debt repayment through sale-and-back and BKC land sale should reduce the
debt burden. We expect any drop in fuel prices to substantially improve the operations of the
company. The stock is currently trading at 8.4x its FY13E EV/EBITDAR; a significant discount to its
other peers. Hence, we expect the stock to be the first to benefit in the sector with any
positive change in the macro environment.
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