Jet Airways clawed its way back to profitability during the third quarter ended December 31, 2006, with a net profit of Rs 40 crore. This was lower than last year’s profit of Rs 61 crore, but is an improvement over the second quarter loss of Rs 55 crore and first-quarter loss of Rs 44 cr. Income from operations for the quarter rose 31% to Rs 1,936 crore.

The company recorded Rs 94 crore of other income during the quarter – profit from sale and lease back of one aircraft accounted for half of this. Jet does sale and lease back transactions on old, depreciated aircraft. These are sold at market price, which is above the book value. Jet shares rose 1.2% to Rs 724 on Friday, while Sensex slipped marginally.

“The airline will start flying from Mumbai to the United States from August this year,” Jet CEO Wolfgang Prock-Schauer said. It also plans two other long-haul flights — to San Francisco via China and to Toronto via Europe — by the end of the year. International operations, that now account for 28% of the airline’s revenues will go up to 50% in two years, he added. The yield on domestic operations stood at $125 per passenger compared to $362 for international flights.

The airline carried 2.7 million passengers during the quarter, up 14% over the year-ago period, while the load factor was slightly lower at 69.3% as against 70.1%. The outlook for the airline is optimistic given the drop in crude oil prices and a slower growth in capacity domestically. “Against 5-6 aircraft that were being added every month, capacity addition has come down to 3-4, ” Mr Prock-Schauer said. As of now, Jet is planning to add 25 aircraft over the next 18 months.

“Also, this increase is happening on a larger base. We are unlikely to see a repeat of last year when capacity expanded by 40%” he added.

As of now, Jet plans to add 25 aircraft over the next 18 months. Five of these are Boeing-737s to be used on domestic routes while the remainder are wide-body aircraft that will fly international.

The airline is planning to upgrade the economy and business class seats on its existing domestic flights. The seat pitch (leg room) in the business class is being increased to 44 inches, while the economy class seats are being fitted with slimmer seats and inflight entertainment (IFE) systems. Kingfisher Airlines is currently the only domestic carrier offering IFE.

One positive development for the company has been the drop in crude oil prices, which should result in lower fuel prices. Fuel accounts for 30-35% of the airline’s total costs. Another major cost head for Jet are the ‘selling & administrative expenses’ – money paid to booking agents, which added up to 10.4% of the total income during the quarter.

Jet is trying to bring this down by doing online bookings. The airline wants to increase the share of online bookings to 25% of total, from 8-9% at present. This should lead to a saving of $8-10 on every ticket, Mr Prock-Schaeur said.