SpiceJet CFO says breakeven not before FY10

By Rakesh Sharma

NEW DELHI (Reuters) - Low-cost carrier SpiceJet Ltd does not expect to break even before 2009/10, with soaring jet fuel prices and slowing traffic growth delivering a double whammy, its chief financial officer said.

Partha Sarathi Basu also said the carrier could raise passenger fares if aviation turbine fuel (ATF) prices rose more than 4-5 percent in a month.

Jet fuel prices, as offered to domestic airlines, rose 56 percent in a year to May in Mumbai and New Delhi, data from Indian Oil Corp showed.

Benchmark Asian jet fuel prices rose 61 percent to $129.16 a barrel in the year to March 2008, compared with a rise of less than 1 percent in the prior 12 months. With crude prices at record highs, these prices are not likely to come down.

"Break-even will not be before 2009/10 due to the fuel prices," Basu told Reuters in an interview on Tuesday.

"Today 52 percent of our cost is fuel price. Last year it was only 44 percent. Our other costs are low and have not gone up."

Brokerage IL&FS Investsmart Securities in April had said pressures from fuel costs could stretch the break-even point of most Indian airlines.

SpiceJet plans to hedge its aviation turbine fuel exposure on a recently approved market for such futures in India.