Here's something that will scare the hell out of Jet Airways' investors

Jet Airways reported a steep loss of Rs 714 crore for the September-ended quarter- the sharpest fall ever.

Sanjit Oberai November 12, 2011 13:01:24 IST
Here's something that will scare the hell out of Jet Airways' investors

For the aviation industry, 11 November was probably the worst day of the year.

First, things got so bad at debt-laden Kingfisher Airlines that there was much speculation over whether the government would bail out the Vijay Mallya-owned aircraft or not. Media reports said the company would have to shut down if it didn't receive cash infusion immediately.

Heres something that will scare the hell out of Jet Airways investors

The airline's management blamed abnormally high fuel costs, an intense price war among rival. Debarka Banik/Flickr

Second, Jet Airways, India's largest private airline, reported a steep loss of Rs 714 crore for the September-ended quarter- the sharpest fall ever.

The airline's management blamed abnormally high fuel costs, an intense price war among rivals and the depreciation in the rupee against the dollar for the abysmal performance. The rupee's gyrations also brought on a forex loss of Rs 276 crore against a gain of Rs 374 crore a year ago.

Firstpost had reported earlier that Jet's losses are expected to peak this quarter. It was only in September 2009 that the company had incurred such a huge loss (See chart below).

Heres something that will scare the hell out of Jet Airways investors

Chart

Finally, SpiceJet also had a bad day as it announced losses of Rs 240 crore despite a 26 percent jump in net sales. Commenting on the results, Neil Mills, chief executive officer, said: "The traditionally weak July-September quarter was made more challenging this year by high fuel prices, a depreciating rupee and an irrational pricing environment."

Nevertheless, both airlines were optimistic about the future, although it's difficult to see why since the troubles plaguing the airline are not going away any time soon.

In the near term, expect the focus to remain on Kingfisher.

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