Praveena Sharma

Bangalore: Exorbitant jet fuel and foreign exchange losses are likely to pull full service carrier Jet Airways into losses in the fourth quarter of 2007-08.

The largest domestic carrier (by market share), which had reported net profit in the fourth quarter in FY07 (Rs 88 crore) and FY06 (Rs 227.1 crore), could slip into losses this financial year, revealed a senior executive of the airline.

The airline will be announcing its results on May 23.

According to a Jet executive, the airline’s spend on aviation turbine fuel (ATF) is likely to go up to Rs 1,200 crore. This is more than double the amount the airline spent on fuel in the December quarter (Rs 525.7 crore).

Jet fuel prices are up to 70% more expensive in India than in regional hubs like Dubai and Singapore. The high costs will likely double the sector’s operating loss to about Rs 4,000 crore in the fiscal year ended March 31, according to industry estimates.

Analysts said that fuel cost of Jet could have shot up because of its rapid expansion on international routes. The airline added 10 aircraft (five wide body and five narrow body) in the third quarter of FY08 and added capacity on the domestic routes.

In the fourth quarter, the airline has added fewer planes.

“We added only one or two aircraft. We launched our Gulf services (in the fourth quarter) with some of our existing aircraft,” said a senior Jet executive.

Jet is also likely to get impacted by depreciation in the rupee. The local currency has fallen 8.35% against the dollar so far this year.

The Naresh Goyal-owned airline could lose close to Rs 200 crore due to the rupee’s fall in the fourth quarter.

Depreciation in rupee value increases the cost of borrowings for Jet. The airline has borrowed Rs 8,000 crore ($2 billion) to acquire new planes from Boeing Co and Airbus.

A senior Jet executive said the airline was looking to raise more funds for its future expansion. For quite some time now, it has been planning to approach the Indian investors with a rights issue.

“Whenever the market condition is right we will come out with the rights issue of Rs 1,600 crore,” said the executive.

Source : DNA