Air Deccan flies into profit zone

Improved margins during the busy winter season have helped low-cost carrier Air Deccan to come into the black for the first time, with a net profit of Rs 9.64 crore for the second quarter ended December 31’06. The airline had notched up a loss of Rs 43 crore in the July-September’06 quarter. Net income from operations rose 32.39% on a sequential basis to Rs 474.89 crore. The profit was aided by income of Rs 132 crore from the assignment of aircraft purchase rights to Investec bank of the UK. This is the second tranche of payment from the $100m raised by the airline in November last year. Commenting on the performance, CEO Capt GR Gopinath said, "The airline carried 16.4 lakh passengers in the quarter compared to 8.3 lakh in the September-December '05 period."

He added, though this profit is due to the other income, we aim to register an operating profit soon. Our passenger loads have been growing steadily and this quarter we have again nudged past Indian Airlines to become the second largest airline in terms of market share. The company has achieved a market share of 19.7%. The average yield per passenger stood at Rs 2,615 showing a YoY growth of 4% over Rs 2,512 in the same period of previous fiscal. Margins have grown to Rs 2,615 per passenger during the period compared to Rs 2,512 last year. The airline hopes to fly 8.1 million passengers this year. Director (finance) Mohan Kumar says: “Our Q2 revenue moved up 19% mainly on account of cost controls.

Our cost per seat kilometre is Rs 3.18, which is amongst the lowest in the country.” Mr Kumar added, “While it takes about 10–12 months for every new route to mature, Kandla, Kullu & Pathankot launched this quarter have already turned profitable, with increased load factors. All the three destinations are unconnected by any other airline. The key is better route planning which leads to enhanced fleet utilization and better yields.” Air Deccan inducted four Airbus A320 planes in the period under consideration. It has added 24 new routes, 38 new flights and 6 new destinations including 3 monopoly sectors to its network this quarter. Air Deccan launched its eighth aircraft base at Ahmedabad in November.

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