Airline Code [DKN]
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Deccan Aviation posted a 33% increase in turnover during Q3 FY08 as compared to Q3 FY07 despite it being a lean season. Deccan’s continued emphasis on improving operational reliability and on-time performance has led to higher guest confidence in Deccan.
Moreover, initiatives to improve customer experience with Deccan has been well-received and has provided substantial impetus to the airline’s positioning as a value-based carrier and its growth
objectives going forward.
-The increase in revenue is primarily on account of improved yields. The average value per ticket
saw an increase of 36% to INR 3,274 in Q3 FY08 from INR 2,412 in Q3 FY07. A similar
comparison for a 9-month period reflects an increase of 15% to INR 2,972 in FY08 from INR
2,573 in FY07.
-The airline has recorded an EBITDAR of INR (409) million during Q3 FY08, an improvement of
up to 45% from INR (746) million in Q3 FY07.
-Soaring fuel prices continued to maintain pressure on margins – fuel rates were up 36% in March
2008 as compared to the March 2007. Fuel costs accounted for 40% of total costs and were up
39% in Q3 FY08 as compared to Q3 FY07.
- The airline recorded earnings before tax of INR (1,983) million in Q3 FY08 after accounting for
capital related costs, an improvement from INR (2122) million in Q3 FY07.
Outlook
Significant progress has been made with regard to achieving meaningful synergies as a result of combining operations of Kingfisher Airlines with Deccan Aviation. One of the world’s leading firm of
consultants, Accenture has been engaged to identify and realize the significant synergies arising from the combination of Deccan’s and Kingfisher operations. However, the full impact of the same will be
visible in a phased manner during the next 12 -18 months.
The onset of the summer schedule will see a rationalized network for the combined entity, drawn up effectively to leverage both the value market as well as the full service market spectrum.
The relevant stock exchanges have approved a comprehensive scheme of merger of the passenger airlines business of Kingfisher with Deccan. The shareholders and creditors of both companies have also approved of the same. The combined fleet and unrivalled network of 570 flights connecting to 71 locations is expected to garner substantial and sustainable gains.
Mr. Ramki Sundaram, Officiating CEO, Deccan said, “Coupled with strong and streamlined organizational capabilities across key functions and improved product value proposition, the combined entity of Deccan and Kingfisher Airlines is well-poised to become the single largest airline in the domestic market in terms of both network and market share. Besides, this will set the pace for the airline’s foray into lucrative international markets, thus providing seamless connectivity to both the domestic as well as international traveler”.
The Company at Board meeting also agreed that Dr. Vijay Mallya will be the Chairman of the Board of Directors taking over from Lt. Gen. N.S. Narahari. Lt. Gen. N.S. Narahari will continue to remain a Director on the Board of the Company.
Capt. Gopinath, commented “Lt. Gen Narahari has been the Chairman of Deccan since the inception in 1997, providing the moral moorings and leadership to the board and the company and steering Deccan to commanding heights and revolutionizing the aviation landscape of the country. We acknowledge his contribution and guidance.”
He also added “to enable successful merger between Kingfisher and Deccan and effective realization of both cost saving synergies and revenue enhancement, Dr. Vijay Mallya was chosen to lead the Board
of Directors.”
© Centre for Asia Pacific Aviation. Date posted: 24-Apr-08
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Deccan posts 33% increase in revenue despite lean season 
