Jet’s shares up despite the airline posting a huge loss
November 10, 2009
Jet Airways has posted a huge loss of Rs406 crore in the second quarter of 2009, but it has improved its capitalisation on the Bombay Stock Exchange as the scrip has gone up from Rs385 on 27 October 2009 to Rs466 on 8 November 2009.
The carrier has initiated discussions with SpiceJet for an engineering and ground alliance for maintenance of its fleet of Boeing aircraft. Jet has 33 Boeing 737-800s and plans to acquire 20 similar planes, whereas Spice has 16 planes and plans to acquire nine similar planes. If engineering and maintenance is carried out jointly, Jet could save on major expenses which can positively impact its bottom-line. A similar exercise carried out in the past between Kingfisher and Deccan saved around Rs150 crore for both companies.
In addition, Jet is improving its seat factor utilisation which has gone up from 61.2% to 71.8% during the past quarter. Jet’s EBITDAR (earnings before interest, tax, depreciation and rental) has also improved from -43% to -11.6%. “In the airlines industry, rentals of planes are very important and in such cases, the right comparison is comparing EBITDAR and not EBITDA,” said a senior partner in Ernst & Young, preferring anonymity.