Jet Airways and SpiceJet report losses

Reuters/New Delhi

India’s Jet Airways and its smaller rival SpiceJet reported quarterly losses yesterday as fare increases were not sufficient to cover high costs of operations.

Jet, which has agreed to sell a 24% stake to Gulf carrier Etihad in a $370mn deal, was optimistic of demand growth and said airlines were regaining their pricing power.

Jet said in a statement yesterday its planned deal with Etihad would bring “immediate revenue growth and cost synergy opportunities” and help strengthen its balance sheet.

Etihad’s investment in Jet is the first by an overseas operator in an Indian airline since ownership rules were relaxed and provides Jet with a deep-pocketed global partner as well as cash to retire debt.

 Jet shareholders approved the deal at a meeting in Mumbai yesterday, a senior company executive said, but a proposal to change the company’s rules for operations, or the so-called Articles of Association, was deferred as the company awaits regulatory clarity.

The deal is yet to win approval from Indian regulators.

Jet, controlled by Indian businessman Naresh Goyal, said its net loss widened to Rs4.96bn ($89mn)for its fiscal fourth-quarter ended March, from Rs2.98bn reported a year earlier.

Total revenue for the country’s No 2 carrier by domestic market share, fell to Rs44.84bn from Rs46.34bn a year earlier. Jet said its fourth-quarter results included a one-time impact of Rs3.1bn, mainly due to payroll arrears, maintenance and foreign exchange losses.

SpiceJet, ranked No 3 by local market share, said net loss for the three month to March narrowed to Rs1.86bn from Rs2.49bn a year earlier.

SpiceJet however saw its revenue for the quarter rising 31% from a year earlier to Rs14.56bn as number of passengers grew by a fifth.