Showing posts with label FY2014. Show all posts
Showing posts with label FY2014. Show all posts

Emirates group first half fiscal 2014 net profits up 4%. Airline net profit up 2% to $475 million

by Devesh Agarwal

Emirates A380. Photo copyright Devesh Agarwal.
The Emirates Group, the aviation holding company of the Al Maktoum family which rules Dubai, and the parent of Emirates airline, announced its first half (April to September) results of the fiscal year 2014 (ending March 31, 2014) today.

Group

The Emirates Group revenues reached AED 42.3 billion (US$ 11.5 billion) for the first six months of its current fiscal year ending September 30, 2013, up 13% from AED 37.5 billion (US$ 10.2 billion) at 30 September 2012.

Net profit for the Group rose to AED 2.2 billion (US$ 600 million) an increase of 4% over the last year’s results.

The Group’s cash position on 30 September 2013 came down to AED 18.2 billion (US$ 4.9 billion), from AED 27.0 billion (US$ 7.3 billion) six months earlier. This is after a AED 1.8 billion bond repayment which matured in July 2013, a AED 367 million first instalment payment on a USD one billion Sukuk (Islamic equivalent of bonds), and a AED 7 billion injection back into the business to fund new aircraft, engines, spares and other projects across the Group.

His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group said
“The global business environment continues to be challenging. We have stayed agile even as we grow, and this ability to adapt and act quickly has been key to our success. Our investments in the infrastructure of both Emirates and dnata continue to pay off,”
Group employee numbers increased 11.7% to over 75,800 from six months earlier.

Emirates airline

Capacity measured in Available Seat Kilometres (ASK), grew 16.9% on the addition of ten aircraft – six A380s, three 777s and one 777 freighter in the reported six month. 15 more new aircraft scheduled to be delivered to the airline before March 31, 2014, the end of the current fiscal year FY2014.

Passenger traffic carried measured in Revenue Passenger Kilometres (RPK) was up 16.1% with a load factor averaging 79.2% down from last year’s 79.7%. In number, Emirates carried 21.5 million passengers in the six months, since 1 April 2013, up 15% from the same period last year.

Cargo volumes increased 5.2% but the airline has not released the actual performance nomrally measured in FTK (Freight Ton Kilometre) or capacity in ATK (Available Ton Kilometre) .

Emirates airline's revenue, including other operating income, for the six months was AED 39.8 billion (US$ 10.8 billion) up 12% from last year's first half revenue of AED 35.4 billion (US$ 9.6 billion) to return a 2% increase in net profit of AED 1.7 billion (US$ 475 million).

Fuel prices constituted 39% of the airline's expenditures. The Union and state governments of India would be well advised to observe the disadvantage they put Indian carriers to, thanks to their greedy excessive taxation regime which makes fuel between 45%~50% of expenditure.

Emirates launched new routes to Haneda and Stockholm, bringing the total count of new routes launched in the past 12 months to seven including Adelaide, Lyon, Phuket, Warsaw and Algiers. The airline now flies to 137 destinations in 77 countries, up from 126 cities last year in 74 countries. Additional new routes to be added in the remaining part of the fiscal year include Kabul, Kiev, Taipei and Boston.

The airline also celebrated the five year operating anniversary, of its A380 super-jumbo. Emirates' A380s have carried 18 million passengers since its first flight on August 1, 2008 from Dubai to New York.

dnata airport services and infrastructure

dnata (formerly Dubai National Air Transport Association) now operates in 38 countries with revenues including other operating income of AED 3.7 billion (US$ 1 billion), 18% higher compared to AED 3.2 billion (US$ 864 million) last year. Overall profit for dnata rose strongly by 13% to AED 458 million (US$ 125 million).

dnata’s airport operations was the largest contributor to revenues with AED 1.4 billion (US$ 375 million), a 16% increase from last year's first half revenues of AED 1.2 billion (US$ 324 million). The number of aircraft handled by dnata rose 9%, to 141,845

dnata’s in-flight catering operation, which operates the world's largest flight kitchen, in Dubai, United Arab Emirates, recorded strong growth thanks to its acquisition of Servair in Italy in June 2013. Revenues were up 39% to AED 891 million (US$ 243 million). 22.4 million meals were uplifted for the first half of the fiscal year, up a massive 81% from last year.

Revenue from dnata’s Travel Services operation contributed AED 303 million (US$ 83 million), up 16% from the same period last year.

dnata’s cargo handling division grew revenues 4% to AED 546 million (US$ 149 million) on account of increased tonnage mainly for dnata’s UK operation and in Switzerland which rose in total by 2% to 809,236 tonnes.
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SpiceJet posts record Rs. 559 crore loss in Q2 FY2014. Needs urgent capital infusion.

by Devesh Agarwal

Gurgaon based low fare carrier SpiceJet Ltd., continued the record of disastrous performance in the Indian airline industry when it announced a record Rs. 559 crore loss for the second quarter, ended September 30, of the fiscal year 2013~2014.

This compared to the Rs. 163.5 crore loss from the same quarter last fiscal, and a Rs. 50.5 crore profit from the first quarter of this fiscal.

On October 23, India's largest private carrier Jet Airways reported a monstrous loss of almost Rs. 1,000 crore.

The airline blamed the poor performance on the precipitous drop in the exchange of the Indian Rupee vs the US Dollar which occurred in the quarter and contributed Rs. 42 crore to losses. In a statement released late this evening, it said
“The civil aviation sector in India continues to struggle under the burden of several adversities mainly the Indian rupee that saw unprecedented weakness during the quarter,”
Poor demand due to a slowing economy saw a drop in income to Rs. 1,257.22 crore from Rs. 1,701.543 crore in the first quarter, though marginally better from Rs. 1,185.244 crore from the same quarter last fiscal. A 9% growth in number of passengers out-stripped the 17% increase in capacity measured in available seat kilometres (ASK), resulting in a 7% in average passenger yields from Rs. 4,001 to Rs. 3,711. Desperate sales at cut-throat fares have also taken their toll.

A lack of capacity discipline by virtually every Indian carrier, especially domestic leader IndiGo, and Jet Airways, continues to exasperate the soft demand situation, and we see the same indiscriminate financial indiscipline as we did in 2008.

Expenses shot up to Rs. 1,791.623 crore against Rs. 1,641.933 in the first quarter, and Rs. 1,357.305 crore from the same quarter last fiscal. Aircraft maintenance costs shot up almost 64% from Rs. 199 crore to Rs. 325 crore largely driven by Rs. 78 crores in engine maintenance expenses due to a bunching up of shop visits.

Fuel costs fell from 45% of total expenses to 39.7% but thanks to the plunge in income, increased from 43.8% to 57% of income.

Continuing losses have put the airline in a precarious financial position. It is estimated the airline requires a minimum Rs. 1,500 crore capital infusion. While the airline has announced the appointment of Sanjiv Kapoor, the former chief executive of GMG Airlines of Bangladesh, as its Chief Operating Officer, it still lacks a Chief Executive, since the departure of Neil Mills, nearly three months ago.

The silver lining for SpiceJet is that parts of the third quarter and the fourth quarter sees high air travel due to the festival season and returning Indian travel.


The supply-demand imbalance is heading for a precipice with expected the commencement of new airlines AirAsia India, and Tata-SIA.

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Japan Airlines revises its flights and fleet plans for financial year 2013~14

Japan Airlines Group (JAL) today announced revisions made to its flight frequency and fleet plans for the remaining of fiscal year 2013(ending March 31, 2014).

In regards to the airline's domestic network, flight frequencies on select routes will be adjusted to better meet demand as well as the changes in customer travel patterns including seasonal travel patterns in order to further maximize revenue. JAL will also strive to further improve customer convenience by expanding its domestic network.

In regards to the airline's international network, new Boeing 787-8 aircraft will be deployed onto flights between Tokyo (Narita) and Sydney as well as between Tokyo (Narita) and Bangkok to improve cost efficiency as well as to provide customers with updated products and services. In addition, the fully revamped Boeing 777-300ERs (JAL SKY SUITE 777) including the JAL SKY SUITE (named "Best Business Class Airline Seat" at SKYTRAX's 2013 World Airline Awards) will be introduced between Tokyo (Narita) and Los Angeles from November 2013 as well as between Tokyo (Narita) and Chicago from January 2014.

JAL will introduce completely revamped Boeing 767-300ERs (JAL SKY SUITE 767) between Tokyo (Narita) and Vancouver from December 2013 as well as between Tokyo (Narita) and Kuala Lumpur from January 2014.

*The following schedules are subject to government approval.

Domestic Network
Flight Frequency Changes

Route

Details

Date Effective

Haneda = Osaka (Itami)

Increase from 15 to 16 daily round-trip
flights

Oct. 27, 2013 ~ Mar. 29, 2014

Haneda = Sapporo

Increase from 16 to 17 daily round-trip
flights

Oct. 27, 2013 ~ Mar. 29, 2014

Haneda = Izumo

Increase from 5 to 6 daily round-trip flights

Oct. 27, 2013 ~ Mar. 29, 2014

Fukuoka = Matsuyama

Increase from 7 to 8 daily round-trip flights

Jan. 7, 2014 ~

Okinawa (Naha) = Ishigaki

Increase from 9 to 10 daily round-trip flights

Sep. 1, 2013 ~ Jan. 6, 2014
Feb. 3, 2014 ~ Mar. 29, 2014

Okinawa (Naha) = Okayama

Increase from 1 to 2 daily round-trip flights

Oct. 1, 2013 ~ Mar. 29, 2014(*)

Osaka (Itami) = Fukuoka

Decrease from 5 to 4 daily round-trip flights

Oct. 27, 2013 ~

Sapporo = Hanamaki

Decrease from 4 to 3 daily round-trip flights

Oct. 27, 2013 ~ Mar. 29, 2014

Kagoshima = Matsuyama

Decrease from 2 to 1 daily round-trip flights

Jan. 7, 2014 ~
(*) Flight frequency will be back to 1 daily round-trip flight during the following period:
Oct. 15,20,21,27,28,30; Nov. 8~10,26,28; Dec. 1,3,5,7,8,10 ~12; Jan. 17~25,27~31; Feb. 1,2,4


International Network
Boeing 787-8 will be introduced onto the following routes
Boeing 787-8 configured with the JAL SHELL FLAT NEO in Business Class will be introduced between Tokyo (Narita) and Sydney as well as between Tokyo (Narita) and Bangkok.

Route

Aircraft Type

Date Effective

Remarks

Narita = Sydney

787-8

Dec. 1, 2013 ~

JL771/JL772(JL772 from Dec. 2, 2013)

Narita = Bangkok

Dec. 2, 2013 ~

JL707/JL718, 4 among 7 weekly round-trip
flights
(JL718 from Dec.3, 2013)
*The type of aircraft might be changed due to the delivery schedule of Boeing 787-8.


Other aircraft type changes
JAL also aims to further improve the quality of its products and services offered on other routes, on all 3 daily round-trip flights operated between Tokyo (Haneda/Narita) and Bangkok, an improved JAL Business Class will be offered including the JAL SHELL FLAT SEAT installed on Boeing 777-200ERs, and JAL SHELL FLAT NEO installed on Boeing 787-8s.

Route

Aircraft Type/Date Effective

In-flight Service

Remarks

Haneda = Bangkok

From 767-300ER to 777-200ER
/Dec. 1, 2013 ~

Business Class:
JAL SHELL FLAT SEAT

JL33/JL34*1

Narita = Bangkok*2

From 767-300ER to777-200ER,787-8*3
/Dec. 1, 2013~

Business Class:
JAL SHELL FLAT SEAT(777-200ER)
JAL SHELL FLAT NEO(787-8)



From Narita to Bangkok:
JL717/Daily/777-200ER
JL707/Mo,Tu,Th,Sa/787-8
JL707/We,Fr,Su/777-200ER


From Bangkok to Narita:
JL718/Mo,Th,Sa/777-200ER
JL718/Tu,We,Fr,Su/787-8
JL708/Daily/777-200ER
*1 Premium Economy service will be provided on JL33/JL34 from Dec. 1, 2013.
*2 Among 14 weekly round-trip flights, 10 round-trip flights will be operated with Boeing 777-200ER, 4 round-trip flights will be operated with Boeing 787-8. Premium Economy service will be provided on flights with Boeing 777-200ER.
*3 The type of aircraft might be changed due to the delivery schedule of Boeing 787-8.

Flight frequency changes
Flight frequency will temporarily decrease in response to the passenger demand

Route

Details

Date Effective

Remarks

Narita = Beijing  

Decrease from 14 to 7 weekly round-trip
flights

Nov. 25 ~ Dec. 8, 2013  

JL863/JL864 decreased

Improving the quality of products and services on Europe, North America and Southern Asia routes
JAL is now gradually introducing fully revamped cabin which are both spacious and functional on its Boeing 777-300ERs (JAL SKY SUITE 777) on Europe and North America routes. Additionally, the airline will introduce fully revamped Boeing 767-300ERs (JAL SKY SUITE 767) on middle and long-haul routes.  
                       
1.       Expansion of
JAL SKY SUITE 777
                         
JAL SKY SUITE 777 is now available daily between Tokyo (Narita) and New York, London as well as Paris. Moreover, the new configuration will be introduced on routes between Tokyo (Narita) and Los Angeles as well as between Tokyo (Narita) and Chicago.

Route

Aircraft Type

In-flight Service

Date Effective

Remarks

Narita = Los Angeles







777-300ER

JAL SKY SUITE 777 (*1)
First Class: NEW JAL SUITE
Business Class: JAL SKY SUITE
Premium Economy: JAL SKY PREMIUM
Economy: JAL SKY WIDER

Nov. 2013 ~





(*2)

Narita = Chicago

Jan. 2014 ~
(*1) For more details on JAL SKY SUITE 777, please visit http://www.jal.co.jp/en/newsky/ss7/
(*2) The actual operating date will be introduced on JAL homepage when it has been decided. 


2.       Introduction of JAL SKY SUITE 767                       
JAL SKY WIDER, which is now being installed onto all Boeing 777-300ERs will also be installed on Boeing 767-300ERs. Highlights of the JAL Economy Class seat include increased pitch and a slim style seatback design resulting in approximately 10 cm (Max.) more legroom than the present seat pitch. In JAL Business Class, a new 180-degree fully reclining JAL SKY SUITE II seat will be installed, which was designed specifically for this aircraft type. In addition, each seat in the 1-2-1 configuration provides unobstructed aisle access for an undisturbed flight allowing maximum personal enjoyment and a soothing rest.

Route

Aircraft Type

In-flight Service

Date Effective

Remarks

Narita = Vancouver



767-300ER

JAL SKY SUITE 767 (*1)
Business Class: JAL SKY SUITE II
Economy: JAL SKY WIDER

Dec. 2013 ~



(*2)

Narita = Kuala Lumpur

Jan. 2014 ~
(*1)  For more details on JAL SKY SUITE 767, please visit http://www.jal.co.jp/en/newsky/ss6/
(*2)  The actual operating date will be introduced on JAL homepage when it has been decided.

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Jet Airways Q1 FY2013~14 performance analysis - part 1 - Financials

by Vinay Bhaskara and Devesh Agarwal

Earlier this week, Mumbai based Jet Airways announced a net post-tax loss of Rs. 355.4 Crore (US $ 59.8 million) for the first quarter of Fiscal Year 2014, reversing from a Rs. 24.7 Crore net profit during the same period a year prior.

Total revenues declined a whopping 12.3% to Rs. 4, 064.4 Crore on a 15.0% decline in revenue passengers to 4.13 million, and an 11.3% capacity decline measured by available seat kilometres (ASKs) to 9.13 million ASKs. Seat factors cratered to 78.4% from 82.7% year-over-year (YOY).

Jet Airways recorded a large operating loss of Rs. 111.2 Crore in Q1 versus an operating profit of Rs. 223.5 Crore the year, translating to an operating margin of -2.8% versus +4.9% in Q1 of Fiscal Year 2013.

The nominal average fare paid by Jet Airways customers rose 2.3% to Rs. 8,278, but fell 4.2% on an inflation adjusted basis. Revenue per available seat kilometer (RASK) fell 0.8% year over year to 3.60 Rupees from 3.63 Rupees a year prior while cost per available seat kilometer (CASK) increased 8.7% to 3.92 Rupees. CASK and RASK are used to adjust revenue and cost figures for segment length.

Looking segment by segment, Jet Airways’ full service domestic operations once again performed abysmally, with a net pre-tax loss of Rs. 263.0 Crore versus a profit of Rs. 16.8 Crore the year prior. Operating margin domestically was an astoundingly poor -7.9% versus +6.8% a year prior – a swing of 14.7 percentage points! Domestic revenues fell 13.1% year over year to Rs. 1763.5 Crore, and while domestic RASK actually increased by 0.9% (down 3.3% on an inflation-adjusted basis), it was more than offset by a 17.6% increase in CASK.

Domestic operations continued to suffer from the poor Indian macroeconomic environment, as growth for Fiscal Year 2014 is projected to fall to 5.5% by the Reserve Bank of India. India’s growth prospects seem doveish for the next few years and airline will see growth plateauing over the next few months.

Importantly, fuel is not a major contributor to Jet Airways’ woes, as moderating fuel prices around the globe in Q1 meant that fuel cost per ASK fell 7.5% year over year. Despite the slowing economy, domestic capacity amongst Indian carriers was up 0.1% in Q1 and passenger demand rose 1%.

Low Cost Carriers (LCCs) SpiceJet, GoAir, and IndiGo have continued their rapid expansion despite slowing Indian growth, which has put increased fare pressure on Jet Airways at the lower end. At the same time, the expected fare bump amongst high yield business travellers and first class passengers after the demise of full service rival Kingfisher Airlines largely has not materialized thanks to aggressive pricing on the part of beleaguered national carrier Air India. Despite spotty operational reliability, LCC SpiceJet has continued to profit (Rs. 55 Crore in Q1 of FY14) and its maturing Q400 operation is taking away business from Jet Airways’ regional ATR operations, especially in the South.

International financial performance also weakened year over year, falling to a Rs. 92.4 Crore pre-tax loss from a Rs. 16.5 Crore pre-tax profit the year prior. Revenues fell 11.7% to Rs. 2300.9 Crore as Jet Airways continues to restructure its international operations in advance of the implementation of the newly designed Jetihad partnership with Etihad Airways. Revenue per available seat mile fell 2.1% (7.8% on an inflation adjusted basis), while cost per available seat kilometer grew 2.3%. The operating margin on international operations fell to 0.8%, from 5.6% in Q1 of Fiscal Year 2013.

Despite all the hubbub and media drama surrounding Jet Airways’ international operations, they are actually the better performer within the company on an operating and net basis. International operations came under some pressure thanks to the continued de-valuation of the Indian Rupee since many costs on international operations are accrued in US dollars. That pressure, which contributed nearly a third of Jet Airways’ losses in Q1 at Rs. 134.3 Crores, looks like it should subside to some degree as the Indian government is taking steps to increase in-flow of US dollars.

Bulk of Jet Airways' A330-200 fleet idle at New Delhi
The airline withdrew from many international routes like Mumbai Johannesburg, Chennai Brussels, Brussels New York JFK, and New Delhi Milan. The contraction in operations led to a severe under-utilisation of Jet Airways’ wide body fleet, especially the Airbus A330-200s, (as captured by Devesh Agarwal at New Delhi IGI airport), which led to a Rs. 128.2 Crore adverse impact on finances.

During the analysts earnings call, Jet Airways management indicated that the airline had already leased two A330s to investor Etihad Airways PJSC of Abu Dhabi, and is "close to signing" a deal with another west Asian carrier for five A330s. So the cost impact will reduce in the quarters moving forward.
 
During the call, the airline announced “load factors for the North American routes were at 79.1%, the UK routes were at 84.1%, Asian routes were at 82.1%, Gulf routes were at 83.4%, SAARC routes were at 75.1%.” However, thanks to its contraction on long haul routes, Jet has been unable to capitalize on recovering Western economies in the United States and in the European Union. Still, the outlook moving forward for the international operations. from a purely financial perspective (ignoring strategic considerations), the feeder operation with Eithad, which appears likely to be Jet Airways’ plan as the carrier undertakes a 10 year network planning study, is likely to return Jet to profitability on its international operations at least.
But the domestic operations remain challenging. In our opinion, from a financial perspective, Jet must solve its lagging domestic revenue and market share before the company as a whole can return to profitability. Structurally, the debt load facing Jet Airways, including US $300-400 million in high-cost shorter term debt, is the major challenge. Finance charges stood at Rs. 234.1 Crore in Q1, and with Jet Airways recently committing to order 50 737 MAX, as per a report in the Live Mint, the capital expenditures plan over the next 10 years only looks set to exacerbate that.

Stay tuned for Parts 2 and 3 of our analysis coming later this week, covering JetLite results, analysis of fleet and network plans, and a plan to tackle the debt load.

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