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Jet Airways (India) Ltd (updated - 27 May 2009)
The economic slowdown has resulted in a 20 per cent decline in standalone passenger volumes in the March 2009 quarter for the airline resulting in 8 per cent y-o-y dip in revenues to Rs 2,566 crore. If it posted a net profit of Rs 53 crore, it was only because of a one-time Cenvat credit of Rs 350 crore.

On the back of capacity rationalisation, restructuring of operations, lower fuel costs and improved profitability in its international business, the company’s opm improved to 20.8 per cent in the March 2009 quarter vs 7.7 per cent in the March 2008 quarter. Aided by lower fuel expenses, this is the second consecutive quarter of operating profit margin improvement on the domestic and international routes. Even its low-cost subsidiary, Jet Lite, has seen similar trends.

However, this subsidiary is also its biggest headache. Of the Rs 961 crore consolidated loss for 2008-09, two-thirds is on account of Jet Lite. With costs largely remaining the same, Jet Lite’s gross revenues per passenger is half that of Jet’s. In the low-cost carrier business, severe competition and higher fuel costs meant that Jet Lite needed 93 per cent loads to break even; it managed just 68 per cent.

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But even after a tough year, the outlook for 2009-10 is not exciting as the company management expects demand to remain sluggish in both domestic and international sectors. The lean season would mean that the June quarter numbers would reel under the pressure of poor loads and dipping prices translating into lower profitability. The launch of no-frills operation, Jet Konnect, to link up smaller cities may help the company take a shot at regional markets and improve revenues to a small extent while keeping costs low.

Fuel cost is at half its peak from August 2008, so there would be some savings there. However, the muted growth outlook for the current year means that the company is unlikely to report a net profit in 2009-10. The Jet stock declined 8per cent after the weak performance on Tuesday, but is up 38 per cent over the last month, and trades at Rs 280.
source - BS

Jet Airways (India) Ltd (updated - 29 Dec 2009)
After over three months in limbo (FIPB approvals came much earlier), the CCEA approved Jet Airways’ proposal of raising $400 million through a qualified institutional placement. The equity raised will give a funding leg-up to the cash-strapped airline, which had a net debt-equity ratio of over 7 as of March 31, 2009.

The current consolidated debt levels have, however, improved to $3.2 billion following some repayments. With cash on books of about $180 million, net debt-equity is down to about 4.25. The fund raising will further lower it to 2.7 levels though it represents an effective equity dilution of about 40 per cent assuming its fortnightly average price of Rs 560.48. However, further details are awaited.

The breather comes on the heels of an improved business environment and higher passenger traffic in an era of stable fuel prices. The expected seasonal highs have buffeted hopes that the airline will break-even this quarter after seven quarters in the red. Domestic passenger traffic was up 33 per cent yearon-year to over 7.6 lakh revenue passengers and international traffic was up 19 per cent. Seat factors (ratio of occupied seats to available seats per kilometer) have improved 14 per cent year-on-year domestically to 72 per cent and 18 per cent internationally to 82 per cent.

The trends seem to indicate that yields (ticket pricing) are holding up well with most carriers having rationalised capacity in the last year and focusing on the bottom-line over market share. Notably, the era of cheap air tickets seems to be over for the present. Jet’s management, too, expects domestic yields to improve about 1015 per cent from the trough seen in September quarter.

The stock has performed phenomenally with 230 per cent returns in the last year and has outperformed the Sensex by about 26 per cent in the last month although it had dipped in the interim. Post the approval, the stock closed up 2 per cent at Rs 553. It trades at a priceto-book valuation of about 3based on consensus analyst 2010-11 estimates.
The run-up has left the stock looking quite pricey and analysts believe that there seems to be limited head room from these levels.
source - BS