Jet Airways may report profits soon

Jet Airways (India) Ltd., the country’s biggest carrier, may report its first profit in three quarters, helped by lower fuel prices and income from the sale of an aircraft. Jet Airways will post net income of Rs 138 million in the three months ended December 31, compared with Rs 610 million a year ago, according to the median estimate in a Bloomberg survey of seven analysts. The airline had losses totaling Rs 1 billion in the preceding two quarters. Billionaire owner Naresh Goyal needs to return Jet to profit to help raise $800 million for new planes, after losing market share to low-fare carriers and failing to buy Sahara Airlines Ltd. India’s carriers may lose $250 million this year as new entrants increase competition and force down fares. “Jet’s turnaround is primarily being led by lower fuel prices,” wrote N Krishnan, a Mumbai-based analyst at CLSA Asia-Pacific Markets, in a Jan. 8 earnings note.

“Jet will benefit from what is seasonally its strongest quarter,” wrote Krishnan, who expects it to earn Rs 290 million in net income. Indian jet fuel prices declined 18% to Rs 45,530 per 1,000 liter in the past quarter, tracking falling global prices, according to government data. Fuel is the biggest expense for airlines and accounts for almost one third of Mumbai-based Jet’s total costs. Indian government rules bar the carrier from hedging its local fuel purchases. The airline hedges some of the fuel it buys overseas. Higher fuel prices and the cost of starting international flights to London and Singapore contributed to losses, pushing down its shares by 46% last year. The benchmark Sensex index gained 47% in 2006. Jet Airways, which may have to write off losses from the failed attempt to take over Sahara Airlines, will report its earnings on Jan. 19 in Mumbai. The airline raised fuel surcharges three times last year and added a fee for airport congestion.

“Despite a fall in aviation turbine fuel prices, Jet managed to retain the fuel surcharges on its fares, which we believe will lead to the turnaround in financial performance,” wrote Nikhil Vora, a Mumbai-based analyst at SSKI Securities Private Ltd, in an earnings note. Vora rates the airline's stock as “underperform.” The stock gained 0.3% and traded at Rs 683 on the Bombay Stock Exchange on Monday. Jet Airways sold shares to investors in the country’s largest initial public offering by an airline in February 2005 at Rs 1,100 a piece.The fall in share prices made Jet Airways postpone its plans to sell stock and bonds to fund aircraft purchases. Net sales for the carrier may have gained 24% to Rs 18.33 billion, according to survey analysts.

visit us @ http://www.silkrouteholidays.com