In a sign of further deferment of its $2.6-billion order for 10 Boeing 787-9 Dreamliners, Jet Airways told investors in a post-earnings call on Monday that the full-service airline has nothing on its order book till around 2017-18.
The airline’s current focus is on increasing aircraft utilisation, cost cutting through contract re-negotiations and process improvements, and making existing routes profitable.
“We are right now looking at more or less a flat fleet. We do have some lease expiries coming up, which we are looking to either extend or replace, but broadly, we are not looking at any substantial growth in our fleet. (We have nothing) in the order book for the next two to three years,” Abhijit Dasgupta, vice-president (planning and alliances), said.
Also Read
Cramer Ball, chief executive officer, added, “There is still an intense focus within our business on continuing efficiency, network rationalisation, productivity improvement as well as quality improvement.” Jet has 117 aircraft, including 10 under subsidiary JetLite.
The development comes as a surprise because Jet, which placed the Dreamliner order in 2006, was expected to take deliveries from 2016. This itself was a deferment from the first delivery target of 2015 because it had converted initial orders for the B787-8 version to the larger B787-9 version, with longer range and more capacity — 280 passengers in a three-class configuration versus 240 for the B787-8. The B787-9, which at list prices is $257 million, was expected to bolster its international routes, especially for direct flights to North America.
Industry sources said this strategy might have seen a major change after Abu Dhabi’s Etihad acquired a 24 per cent stake in Jet in 2013. In a sign of reduction of its long-distance fleet, it has already leased out eight of its widebody aircraft — Boeing 777s and three A330s, to Etihad. Two more A330 have additionally been leased to Turkish Airlines. Jet is also believed to have signed an agreement to buy 50 Boeing 737MAX narrow-body aircraft in 2013, though it is yet to make an official announcement of this order. Boeing has a similar order listed under “unidentified customer”. Jet, which reported a net profit of Rs 63 crore in the third quarter of this financial year as opposed to a loss in the previous corresponding quarter, has set itself a target to turn around operations by 2016-17.
The Jet Airways scrip closed 6.43 per cent down to Rs 443.85 on Monday.
Kapil Kaul of Centre for Asia Pacific Aviation said, “We do not see Jet expanding in the near term as the focus is on consolidation and turnaround. Management attention is on internal challenges like network development and further integration with Etihad, aircraft utilisation and delivering an effective cost base.
Post Etihad integration domestic expansion was not expected be the focus and domestic turnaround will remain a big challenge. Jet may have to extend the leases of some of the existing planes or get new narrow body planes on lease to replace some of the older aircraft.”