Deccan Aviation [Get Quote], which owns budget carrier Simplify Deccan, reported an improved performance for the third quarter ended March 2008, increasing its yields by 36 per cent and reducing operating losses by 45 per cent.

The airline, however, continues to bleed and posted a net loss Rs 199.6 crore during the quarter (against a loss of Rs 213 crore for the same quarter last year), thanks to soaring oil prices, which increased 36 per cent during the quarter.

Fuel accounts for 40 per cent of Deccan's costs. The airline earned Rs 24.71 crore profit on transfer of aircraft/purchase rights. The airline executives were not available to clarify the same.

The striking part of Deccan's results was the 36 per cent improvement in yields - the average realisation per seat increased to Rs 3,274 in the third quarter of FY08 from Rs 2,412 in Q3 FY07. The airline did not report its capacity utilisation (load factor) figures.

Similarly, for the nine months ended March 2008, the yields increased 15 per cent to Rs 2,972 in FY08 compared to Rs 2,573 in FY07. Higher realisations helped the company post a 26 per cent increase in net sales to Rs 557.61 crore.

Improved performance helped Deccan reduce operating losses. The company posted an operating loss (loss before interest, depreciation, and amortisation) of Rs 40.9 crore during the quarter ended March 2008, a swing of 45 per cent from the operating loss of Rs 74.60 crore posted during the same quarter last financial year.

"Significant progress has been made with regard to achieving meaningful synergies as a result of combining operations of Kingfisher Airlines with Deccan Aviation. However, the full impact of the same will be visible in a phased manner during the next 12-18 months," the airline said in a statement to the exchanges.

"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 statement added.

Ramki Sundaram, officiating CEO, Deccan, said, "The merger 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 traveller."