Jet Airways on Monday said it would repay $600 million of debt by the end of this financial year through the sale and of some of its aircraft. Chief Financial Officer Ravishankar Gopalakrishnan said, “We have been steadily repaying our debt, both working capital and working capital loans. By March, we expect our debt to come down to $1.96 billion from the current $2.3 billion. We would have repaid about $600 million of our debt this financial year.”
“We are looking at more sale and leaseback options in the current quarter, in addition to those carried out in the previous two quarters. This would result in cash surplus and, consequentially, reduction in the working capital loan, as well as lowering of interest cost,” Gopalakrishnan said.
The airline is also seeking additional working capital to bridge the funding gap resulting from high operating costs and its inability to raise fresh equity. Gopalakrishnan told analysts the airline was holding discussions with a consortium of banks to secure enhanced working capital limit. “It should be finalised by the month-end,” he said. Though he didn’t specify the additional working capital being sought, sources indicated the airline was considering additional funding of Rs 1,000-1,500 crore.
This year, the airline carried out sale/leaseback of four Boeing 737 aircraft.
The airline’s plans to raise additional equity have not materialised yet. During the last couple of years, it has been trying to raise additional equity of up to $400 million through a qualified institution placement or a rights issue.
For the quarter ended September, Jet Airways posted a consolidated loss of Rs 166 crore, owing to high operating costs. It also reported a drop in the number of passengers flown, as well as loads. However, in the winter, it expects high yield growth and good forward-booking trends. The airline plans to discontinue its loss-making routes and deploy aircraft on profitable ones.
Chief Commercial Officer Sudheer Raghavan said, “Given the traction we are seeing in forward bookings, we have decided to convert more Jet Konnect (the airline’s no-frills brand) flights into full-service flights. This will result in higher yields and revenue.” The airline has reconfigured all its Boeing 737 aircraft to add business class seats in the planes and is considering adding extra business class seats in some of these.
“There is an appetite in the market to hold up fare levels,” Raghavan said. Though demand had fallen, capacity had remained constant and fares and yields had held up, he added The airline is phasing out its foreign pilots and hopes to reduce their number to 59 by end of this year. This would result in saving about $36 million, executives said.