Jet Airways in trouble; here is how it wants to get back its mojo

Naresh Goyal-promoted Jet Airways, which reported a loss of Rs 1,326 crore in April-June quarter, plans to sell and lease back “a portion” of the 16 aircraft it owns.

Naresh Goyal-promoted Jet Airways plans to sell and lease back “a portion” of the 16 aircraft it owns. image source: Pixabay

Naresh Goyal-promoted Jet Airways, which reported a loss of Rs 1,326 crore in April-June quarter, plans to sell and lease back “a portion” of the 16 aircraft it owns.

The airline management estimates the market value of these aircraft over $750-800 million.

The airline at present has a fleet 121 aircraft, comprising Boeing 777-300 ERs, Airbus A330-200/300, Boeing 737s and ATR 72-500/600s. Further, it has placed orders for 225 Boeing 737 MAX 8, of which three have been delivered to the airline.

Speaking during a conference call with the analysts, Amit Agarwal, CFO and deputy CEO of Jet Airways, referring to the monetary value of these aircraft said, “We have a clear intent to put a portion of these to sale and lease back. Clearly there is a huge equity sitting there,” Agarwal said.

As part of the turnaround strategy, the airline’s Board on Monday decided to bring cost-cutting measures, debt reduction and funding options, infusion of capital, monetisation of assets including the company’s stake in its loyalty programme. The airline executives claim the company will save an excess of Rs 2,000 crore due to cost reduction over the next two years.

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Further, the airline management said it reduced debt by around Rs 700 crore during March-June this year by way of lease incentives and fresh borrowing from the domestic banks. The airline management did not specify the amount it received as lease incentive. Ravi Chandran, senior VP of the airline, said the incentive will be spread over the period of lease. The carrier plans to repay around Rs 2,200 crore this year.

On the airline’s efforts to reduce its fleet maintenance costs, which increased by 20% in the latest quarter, Agarwal said with an important negotiation they will be in a position to save around Rs 650 crore from January 1, 2019. Similarly, due to another negotiation the carrier will be able to save around Rs 350-370 crore this year.

Source: DNA Money

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