Jet focus for next two years will be on cutting debt

Mumbai: Jet Airways, India’s largest private air carrier and the second largest by passenger numbers, has begun to trim its financial liabilities through debt repayment, extension of repayment period and deferring of capacity expansion. The company has a debt burden of Rs 14,500 crore, about five times the equity, and it aims to bring down the debt to below Rs 10,000 crore by 2011, said two banking sources.
It has also decided to raise about Rs 2,000 crore from the equity market, partly to repay the liabilities. Sources said the company would prefer the qualified institutional placements (QIP) route against issuing global depository receipts (GDR), as the demand for aviation stocks has weakened abroad.
K G Vishwanath, vice-president of commercial strategy and investor relations, said the company has enough time, of eight to 12 years, to complete repayment of most of the loans. “The comfortable debt-equity position in the aviation sector is four to six times. So, we are at the safer side. When we say the debt is at Rs 14,500 crore, we should also consider the book value of the assets, which is at Rs 13,000 crore. The market value of these assets would be higher, at Rs 15,000 crore,” he added.
Jet, which operates 106 aircraft, including the 23 planes of JetLite, its low-cost carrier, has also deferred the purchase of 13 aircraft for two years. The earlier plan to buy these would have added debt of Rs 7,500 crore. The majority of the new capacity was planned for its domestic operations, which witnessed a 30 per cent dip in revenues in the first quarter.
28/07/09 Nevin John/Business Standard

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Categories: Jet Airways Jul 2009