Update: Deccan Aviation expects to break even by FY08

Our Corporate Bureau
25 September 2006

Mohan Kumar says that the company has signed a term sheet of $100 million to take care of its contingencies. He expects the company to break even by FY08. He also adds that the company intends to target a market share of 25 per cent to 28 per cent by FY08. CNBC - TV18 shares with domain-b its interview with Kumar:

Can you break down the losses in FY06, how was April to June?
We have incurred a net loss of Rs 110 crore from April to June. One has to realise here that we have introduced three A320s and two ATR72s into service, which is an induction of 5 planes. So obviously, it pulls down the load factor and also the yield and the expenses will be up for these five aircraft operations.

Given that situation, it should be a good result of  Rs 110 crore net loss and of course, there is probation for non-cash charges like amortisations and depreciations. So the cash loss is about Rs 100 crore in the first three months.

If one looks at the past twelve months, where we had introduced seven airbuses and around eight ATRs, we were able to recoup the loss within that one year.

When do you hope to break even on cash?
I have always been saying that at this high growth rate, it is difficult to obtain the profitability in a competitive scenario. When growth stabilizes around 30 per cent to 35 per cent, it is definitely possible to look at the profitability.

What would you like an investor to look at? What kind of numbers, from your point of view, should we be looking at to judge performance?
We are raising another $100 million in this financial year, which will give us a cash flow for about 15 months. We are building up a sizeable network for the country on a low cost basis so that the public can depend upon the large network as well as the low fares. Hence, the investors are investing in this business with that point of view.