INDIAN

AVIATION
INDUSTRY

FINANCIAL STATEMENT ANALYSIS

Introduction

Financial
Analysis

Competitive
Analysis

DuPont
Analysis

Stakeholder
Analysis

Valued at $16 billion, it is among the world's top 10 aviation

industries
Currently accounts for 0.5% of India's GDP
Caters to 150 million passengers, expected to grow to 450
million by 2020

INDIAN
AVIATI
ON
INDUST
RY

Recorded a 13% growth and a 10% CAGR over a period of

FY 03-13
Domestic passenger traffic increased by 5% to 122.43
million
International passenger traffic increased by 8.3% to 46.62
million
Cargo throughputs have also shown a growth of 7.7%
Major players include IndiGo, Air India, SpiceJet, Jet Airways,
GoAir

Introduction

Financial
Analysis

Competitive
Analysis

DuPont
Analysis

Stakeholder
Analysis

SPICEJET Financial Analysis

Indias 3rd largest airlines with a market share of 20.40 %

Total revenues increased from Rs. 39979.72 million(FY12) to Rs.
57624.81 million(FY13)
Additional capital infused by promoters increasing stake from 43.65%
to 52.13%
Spicejet recorded an annual loss of Rs.1910.76 million in the FY13
Spicejet witnessed an increase of 170% in expenditure in depreciation
on account of induction of eight bombardier aircraft and depreciating
rupee.
capital
infused by
The Additional
profitability
was impacted
onpromoters
account ofincreasing stake from
43.65%
to 52.13%

Increase
in exchange rate by 6%(51Rs/$ to 54.4Rs/$)

International crude prices went down to $95/barrel from

$120/barrel however
there was no
change in domestic ATF prices.

Financial
Analysis

Introduction

DuPont
Analysis

Competitive
Analysis

Stakeholder
Analysis

SPICEJET Trends over the years

Operating Revenue
60000
50000
Operating
Revenue

40000
30000
20000
10000
0
FY10 FY11 FY12 FY13

Passenger Load Factor

Profit After Tax

2000
1000
0
-1000 FY10 FY11 FY12 FY13
-2000
-3000
-4000
-5000
-6000
-7000

Profit After Tax

Revenue Passenger Kilometres

14000

84
82
80
78
76
74
72
70
68

12000
Passenger
Load Factor

Revenue
Passenger
Kilometres

10000
8000
6000
4000
2000
0

FY10

FY11

FY12

FY13

FY10 FY11 FY12 FY13

Introduction

Financial
Analysis

Competitive
Analysis

DuPont
Analysis

Stakeholder
Analysis

JET AIRWAYS Financial Analysis

Indias 2rd largest airlines with a market share of 22.40 %

Jet Airways recorded losses in the consecutive years resulting in a
negative Share Holders Equity for FY 2012-13
The rate of increase in operating expenses is less than revenues thus
contributing to lower losses in recent years
Out of non-current assets, tangible assets have reduced from 79.02%
to 57.3%. Lease back of aircrafts could be one of the reasons
Interest expenses have increased despite a fall in long term and short
term borrowings mainly due to impact of depreciating rupee
Even though losses have reduced, cash flow from operating
activities have reduced in FY 2012-13 from FY 2011-12. This could
be point of concern for investors.
Also, an increase in cash flow from investing activities can be
observed.

DuPont
Financial
Competitive
Stakeholder
Financial Analysis Competitive Analysis
DuPont Analysis
Stakeholder Analysis
Introduction
Analysis
Analysis
Analysis
Analysis

JET AIRWAYS Trends over the years

Introduction

Financial
Analysis

Competitive
Analysis

DuPont
Analysis

Stakeholder
Analysis

Financial Ratio Analysis Comparison with Industry

Profitabi
lity and
turnover
ratios
Liquidity
ratios

Ratio

Industry

Jet
Airways

ROA

-0.055

-0.02

-0.07

ROE

0.067

-1.16

1.03

ROCE

-0.108

-0.07

-0.154

Profit Margin

-0.108

-0.027

-0.033

Current Ratio

0.253

0.345

0.45

Quick Ratio

0.221

0.278

0.43

Debt-Equity Ratio

-4.745

-21.483

-6.97

10.652

1.394

-0.868

Solvency Interest Coverage

ratios
Ratio

SpiceJet

Introduction

Financial
Analysis

DuPont
Analysis

Competitive
Analysis

Stakeholder
Analysis

Industry Comparisons
ROA

ROE

0
Industry

-0.01

Jet Airways

1.5

SpiceJet

-0.02

1
ROA

-0.03
-0.04

-0.05

-0.5

-0.06

ROE

0.5
Industry

Jet Airways

SpiceJet

-1

-0.07

-1.5

-0.08

ROCE

Profit Margin

0
-0.02

Industry

Jet Airways

SpiceJet

-0.02

-0.04
-0.06
-0.08
-0.1

ROCE

-0.04
-0.06

-0.12

-0.08

-0.14

-0.1

-0.16
-0.18

-0.12

Profit Margin

Introduction

Financial
Analysis

DuPont
Analysis

Competitive
Analysis

Stakeholder
Analysis

Industry Comparisons
Quick Ratio

Current Ratio
0.5
0.4
0.3
Current Ratio

0.2
0.1
0

0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0

Quick Ratio

Industry Jet Airways SpiceJet

Debt-Equity Ratio
0
-5
-10
-15

Interest Coverage Ratio

12

Industry Jet Airways SpiceJet

10
Debt-Equity
Ratio

Interest
Coverage Ratio

8
6
4
2

-20
-25

0
-2

Industry Jet Airways SpiceJet

Introduction

Financial
Analysis

Competitive
Analysis

DuPont
Analysis

Stakeholder
Analysis

DU PONT ANALYSIS
SPICEJET
JET-AIRWAYS

ROE
1.03
-1.16

Leverage(Asse
Profitability(ROS) Efficiency(ATR) t-Equity Ratio)
-0.028
2.28
-13.56
-0.028
0.85
47.27

ROE of Spicejet is positive (1.03). Though

this looks good prima-facie, but the
company has negative equity and profits,
making this ratio positive:
-ve ROS: The company has made losses
but the revenues are high as compared
to profits, because of which the ROS
ratio is not very high ve.
-ve high leverage: The company has
negative owners equity(as a result of
accrued losses) and high debt.
Good ATR: The company is doing good
in making use of its assets to generate
high revenues.

ROE of Jet Airways is negative (-1.16) and

higher than -1, which means company has
made more losses than total equity. This is
on account of following:
-ve ROS: The company has made losses
but the revenues are very high, because
of which the ROS ratio is not very high
ve.
High leverage: The company has
procured very high debt as compared to
shareholders equity to fund the assets.
Decent ATR: The company has done
fairly well in making use of its assets.

Introduction

Financial
Analysis

DuPont
Analysis

Competitive
Analysis

Stakeholder
Analysis

Investors Perspective
1

Apart from the trends, from the macroeconomic point of view, India
has a fast growing travel market which indicates high growth
potential in this segment.

Introduction

Financial
Analysis

Competitive
Analysis

DuPont
Analysis

Stakeholder
Analysis

Lenders Perspective
Due to huge losses incurred by the companies in the industry over the
years, most of the companies have drawn huge amounts in borrowings to
finance their operations. The credit worthiness of the company in
interest of bankers and bond markets can be understood by analyzing the
liquidity and solvency ratios in comparison to Industry average.

Owing to these facts, Spicejet seems to be a better proposition for

Introduction

Financial
Analysis

Competitive
Analysis

DuPont
Analysis

Stakeholder
Analysis

Management Perspective

For better asset utilization:

fare and route rationalization,
optimizing aircraft
utilization(including short term
leasing out of aircraft),
improving operational
efficiency & renegotiation of
contracts
Increase in international operations
by adding international
destinations and routes
Increased focus on ancillary
revenues helpful in offsetting costs
from operations

Cost reduction: Reduce ancillary costs to

improve profitability.
Equity: Finance should be raised by
equities instead of debt to help maintain
better leverage.
Load factor: Flights operating in loss
making routes should be discontinued or
rerouted to high traffic routes. This would
help improve Asset Utilization and Return
on Assets.
Lease back of tangible assets: Poorly
utilized Aircrafts and airport holdings could
be leased back. This would generate cash
in flow by investing activities thereby
improving liquidity.

References:
1.Annual Reports of Jet Airways and Spicejet for FY 2012-13 and FY
2011-12.
2.http://dgca.nic.in/reports/Market.pdf
Categorie
s
Profitability
& turnover
ratios

Liquidity
ratios
Solvency
ratios

Ratio

Indigo

Jet
Airways

ROE

3.04

-0.41

ROA

0.24

0.20

ROCE

-1.66

-0.25

Net Profit Margin

9.06

12.67

Current Ratio

0.37

0.35

Quick Ratio

0.5

0.08

Debt Equity Ratio

8.42

-2.33

Interest Coverage

16.82

1.05

Industr
y

THANK
YOU.