Jet Airways' infusion in past quarter at $300 million; stock gains 5%

Incentives from aircraft lessors helped Jet Airways reduce debt and take care of operating expenses in the June quarter, the airline management told analysts in a post-results conference call.

The airline said it had an infusion of $300 million (Rs 20.9 billion); this included lease incentives and new bank borrowing. It did not specify the amount of lease incentives but  sources said it was over $200 million. The airline has entered into sale and lease-back arrangements for at least 20  Boeing 737 Max planes and has a total of 225 on order. Deliveries began from June. 

Deputy Chief Executive Officer Amit Agarwal said the net debt was reduced by a little over Rs 7 billion, to Rs 73.6 billion, between March and June. Repayment of Rs 22 billion is due this financial year and it will use funds from a proposed stake sale, lessor incentives and other accruals. The net loss was nearly Rs 13.3 billion in the quarter, its third highest quarterly one. The airline blamed this on high costs and low fares. The management has announced a turnaround plan and initiatives to reduce costs by at least Rs 20 billion over the next two years. This includes renegotiation of maintenance contracts, aimed to save Rs 6.5 billion, starting next January. Other big items are savings on distribution expenses  and fuel optimisation.

The management said it had wet-leased (hiring of aircraft and crew) three ATR-72 planes to save on cost. And, was looking at sale and lease-back of 10 Boeing-777 and  three Airbus A-330 planes.

Some analysts were not impressed by the management commentary and asked why the airline was still unable to improve its revenue. 

“When are we going to address the main elephant in the room, which is the revenue component and pricing?” one asked, referring to low fares. Some also  questioned the management on the drop in loads and unit revenue on a year-on-year basis. 

Vinay Dube, chief executive officer, said the airline had plenty of leverage in the aspects of pricing, fares and network. It was working on these for revenue growth.

Jet stock erases early losses; gains 5%

Jet Airways stock erased all its early losses and ended with nearly 5 per cent gain on Tuesday following the announcement of a turnaround plan.

The stock bounced back from intra-day low — down 3.5 per cent —and jumped 4.61 per cent to end at Rs 294.80 on the BSE. During the day, it soared 7.62 per cent to Rs 303.30.

The scrip had opened nearly 3 per cent lower. On NSE, shares of the firm closed at Rs 295.45, up 4.67 per cent.