Jet Airways falls deeply into the red in 2QFY2012 but efforts in place to improve financial position

Jet Airways Group, India's largest airline group by market share, swung to an expected net loss in the traditionally weak second quarter (2QFY2012, three months ended 30-Sep-2011) compared with a profit a year ago, hurt by rising fuel prices, a tough pricing environment and large forex losses in the quarter, despite strong passenger and revenue growth. Yield weakness was a concern for Jet Airways, like its peers in the quarter, with Jet Airways senior VP finance, M Shivkumar, noting Air India has been compounding a price war that has caused industry-wide losses and weakened yields.

"Air India is discounting fares and that's absolutely a problem. Ideally, fares should go up when oil-import costs go up. That's not happening and that's why airlines are in this situation," Mr Shivkumar said, as quoted by Bloomberg. CCO Sudheer Raghavan, however, noted that it is seeing "significant" yield improvements in Nov-2011, with fare increases of 18-20% in recent weeks, amid capacity cutbacks by Kingfisher Airlines over the peak travel period in India. "We feel that there will not be any undue pressure on the yields in the coming months," Mr Raghavan said.