Jet Air in the black on higher fares, plane leasebacks

India''s biggest airline Jet Airways has reported a fourth consecutive quarterly profit in the second quarter ended 30 September - of Rs28.36 crore ($7 million), compared with a loss of Rs55.13 crore ($14 million) a year earlier - after it raised fares, as well as sold aircraft and leased them back. The airline also reported a Rs73.54 crore ($19 million) foreign exchange gain and a Rs315 crore ($80 million) profit from plane sales.

Jet''s acquisition of Sahara Airlines in April and the Kingfisher Airlines takeover of Deccan Aviation have curbed price wars that led to a combined $500 million in losses for Indian airlines. Fares may rise even further, as more of India''s billion-strong population flies for the first time, making it the world''s fastest-growing market for air passengers in the next two decades.

Mumbai-based Jet had been forced to sell 60 per cent of its seats at a discount last year. This year, it increased fares by Rs200 last month and cut the number of tickets it sells at a concession. Jet also eliminated some low-fare tickets. The airline also sold four aircraft during the quarter, and leased them back.

Jet''s sales rose to Rs1,820 crore ($463 million) from Rs1,620 crore ($412 million). Jet''s foreign currency gains come from the appreciation of the rupee against the dollar, which cut the value of its outstanding overseas loan. The airline has $800 million (Rs3,144 crore) in overseas loans, to buy more than 30 new planes from Airbus and Boeing. The rupee has gained 12.2 per cent against the dollar this year.

The Jet Airways stock has gained 50 per cent this year, compared with a 45 per cent gain for the benchmark 30-scrip Sensex index. It expects to complete a previously announced $400 million rights offer before the fiscal year ends in March.

Jet Airways raised Rs1,900 crore ($483 million) from an initial public offering in 2005, the largest IPO by an airline in India. The IPO was priced at Rs1,100, but the shares have tanked since, and the rights issue will offer shares at a discount to the then prevailing market price, an airline representative said.

Jet Airways needs funds to make part payments for $2.5 billion (Rs9,825 crore) in aircraft orders, including 10 Airbus A330s, 10 Boeing 777s and 10 single-aisle Boeing 737 planes. The carrier says it is breaking even on most overseas routes to Southeast Asia, but foreign routes as a whole still don''t earn a profit.

``While the older foreign routes mature, we are opening up new routes, which have start-up costs,'''' he said. The carrier will start flights to the Middle East in January 2008, where the break-even period will be ``much shorter.''''