Domestic banks infused $300 million in debt hit Jet Airways today. After 2 consecutive quarter ended losses, Jet Airways received advanced lease incentives and bank borrowings.
For June quarter Jet Airways recorded a net loss of ₹1,323 cr and for March ended quarter it recorded losses of ₹1,036 cr.
Revival Plan
In the last quarter, the company spent almost ₹14 crore per day on operations expenditure. With a ₹8,620 cr debt as on June 30, Jet Airways devised 2 plans for revival. The first includes capital infusion. And the second one suggests cost reduction plan of more that ₹2000 cr in 2 years.
Under cost reduction, the airways plans to improve pricing and maintenance cost through renegotiated contracts, sales and distribution cost and fuel optimization. Better inventory management, wet leasing (hiring an aircraft including the flight crew and sometimes fuel) small aircraft.
‘Legacy issues at Jet Airways has created a cost structure which is not sustainable. One has to be cost- competitive and this is why the airline has gone into losses. It is in a cyclic trap and it must have the balance sheet to support the cycle. I am confident that the measures announced will help but they have to raise the resources to deal with the tough cycle,’ Ansuman Deb, analyst, ICICI Securities said.
Jet Airways – planes
11 fuel efficient Boeing 737 Max planes will be in fleet by March. Out of these 3 have been delivered and 2 will be delivered soon. Inducing B737 will contribute to 8-10% of the proposed growth.
‘Further, the induction of B737 Max will help us achieve the stated 8-10% growth plan’, Vinay Dube, CEO said.
The 16 planes that will be leased include 10 Boeing 777, 3 Airbus A330 and 3 Boeing 737 with a market value of ₹750 – ₹800 million.’Clearly there is a large equity sitting and Jet Airways can sell and lease back some of these planes’, he added.
Jet Airways plans to get rid off ₹2,200 cr debt in the current fiscal.