A Jet Airways passenger aircraft takes-off from the airport in Ahmedabad
By Devidutta Tripathy
NEW DELHI (Reuters) - Jet Airways
Jet, which has lost money in the past six years, is awaiting approvals from the Competition Commission of India (CCI) for the deal and is on course to complete the transaction during this quarter, Chief Financial Officer Ravishankar Gopalakrishnan said.
An Etihad spokesman declined to comment, after Jet's earnings announcement on Wednesday, on whether Jet's quarterly loss would have any impact on the deal. The stake sale, cleared by the cabinet this month, is meant to help Jet break out of a pattern of losses in the domestic airline business.
The net loss widened to 8.91 billion rupees in the three months ended September 30 from 997 million rupees a year earlier.
An economic slowdown also meant lower yields, a gauge of the average fare paid per kilometre flown, Jet said on Wednesday.
A fall in the value of the rupee, the high cost of fuel and an increase in fees at some airports also led to the loss, said India's second-biggest carrier by domestic market share.
The loss in the fiscal second quarter is the biggest ever for Jet, the first of India's airlines to publish earnings for the quarter, according to data compiled by Thomson Reuters from company filings. It reported a net loss of 7.1 billion rupees in the September quarter of 2011.
Despite the sector's current problems, deep-pocketed foreign players such as Singapore Airlines
The Indian government expects passenger air traffic to almost triple during the current decade.
Etihad's $334 million deal for a 24 percent stake in Jet is the first investment by a foreign carrier in an Indian airline since the country last year changed rules to help channel capital into a sector.
"The synergy between the two airlines in terms of commercial cooperation and the kind of cost synergies that we will achieve will be significantly increasing the profitability for the airlines in the coming quarters," Jet's Gopalakrishnan said.
Jet shares fell as much as 6.4 percent in Mumbai trading on Thursday to their lowest level in about seven weeks, before paring losses to trade about 2 percent down by 0911 GMT.
High costs of jet fuel and aggressive pricing as competition increases will likely hurt airlines' finances in the coming quarters, analysts say. Jet paid 8 percent more for fuel from a year earlier, it said.
Income from operations rose marginally to 37.88 billion rupees in the quarter ended September from 37.55 billion rupees a year earlier, Jet said, while expenses jumped nearly a fifth to 48.51 billion rupees.
Some of its aircraft sat idle, accounting for 1.2 billion rupees in losses.
All players in India's five-player airlines market are losing money with the exception of unlisted IndiGo, the biggest Indian carrier by local market share.
Etihad is investing another $150 million in Jet's frequent flyer programme and has spent $70 million to buy Jet's three pairs of Heathrow slots through a sale and leaseback agreement, as part of the deal, which was first agreed in April.
Etihad will also support Jet with up to $150 million of foreign currency loans. The Indian carrier's debt at the end of September was about $1.9 billion.
(Additional reporting by Tripti Kalro in Bangalore and Praveen Menon in Dubai; Editing by Kenneth Maxwell, Mark Potter and Ryan Woo)