About The Company
The high cost flight counted in privileged class of flying is passsing under a very bad phase. The whole aviation sector as a whole is under the influence of slowdown and finding difficult path for the survival itself.
About the Results
Jet Airways has announced its third quarter performance .Its Q3FY09 performance was dismal to say the least. It posted a loss of Rs 214 crore in the third quarter, which is more than double the net loss of Rs 91 crore recorded in Q3FY08. This loss was despite the fact that net sales rose to Rs.2908 crore from Rs 2,426 crore year-on-year. Yet, the silver lining here is that QoQ, the net loss has come down 44%.
The most apparent reason for the loss was obviously the high fuel and other operating costs and the matter was further aggravated due to lower load factors. The company also had to big price due to the launch of its international activities which hiked the costs. It also posted a forex loss of Rs.49 crore.
On the international front, the company cancelled its loss making route of Amritsar-London and also
It is also working out lease agreements, it has already leased three long haul flights to Turkish Airlines, two to Gulf Air and is also close to finalising lease for four more longhaul aircrafts thus eliminating surplus capacity.
To cut costs, the company did want to slash jobs but was not allowed to do so due to large scale public demonstrations against the company. It then announced salary cuts but is yet to be implemented. It has also renegotiated agreements for goods and services and all these measures would hopefully bring down the costs in Q4.
Yes, the slowdown would impact the load factor but the company hopes to offset this with lower ATF. And more importantly, the company has clarified that it does not face any liquidity crunch as it has received close to Rs.1250 crore to meet its working capital needs from various banks and in the coming weeks, it also plans to go for another term loan of Rs.750 crore. Interest outgo would thus burgeon and is a cause for concern. Interest outgo in Q3FY09 was at Rs.205.93 crore as against Rs.156.46 crore in Q2FY09 and 155.41crore in Q3FY08.
About The Stock
The stock has failed to performed ever since it has entered into the capital market.The stock didn't show any significant rise even when the company was in profit and the performance of the stock has been so bad that it failed to touched even the issue price.The investor in the stock has been literally looted. The conclusion is clear that one should stay away from this stock in aviation sector.
Disclaimer : I never had any holding in this stock