Jet Airways takes contra call, to buy 17 Boeing aircraft

Mumbai: You would assume most airline companies around the world - and certainly the ones in India – to be bearish on the sector. You would also think saving rather than burning cash will be a priority right now, when most are saddled with distressing financials.
But Jet Airways, India’s largest private airline, has just taken a contrarian bet by exercising an option to buy 17 single-aisle 737-800 planes from Boeing Co, a senior executive at India’s largest airline by market share said on Friday.
“Yes, we have converted an option for 17 jets into a firm order,” said the executive, who declined to disclose the value of the deal for the short-to-medium range planes. The deliveries are to begin from 2013.
“Jet Airways has placed an order for 17 Boeing 737 aircraft,” a Boeing spokesperson also confirmed to media.
At list prices, the contract is worth about $1.4 billion, though customers generally negotiate steep discounts.
This order comes at a time when Jet is trying to cut operating costs, especially that of jet fuel. Intense competition also hasn’t allowed the carrier to raise fares much to cover those costs. Jet Airways posted a net loss of Rs 714 crore in the quarter ended September 30, 2011, compared to Rs 12 crore in the same period last year. It had made a profit of Rs 10 crore in the same quarter last year. Earnings were also hit by an exceptional forex loss of $52.7 million due to depreciation of the rupee.
Jet has a fleet of 101 planes, including 59 Boeing 737s. In 2007, it had placed an order for 20 Boeing 737s, with an option to buy more. Boeing said the 737 was its best-selling commercial airliner, with 8,800 orders.
14/01/12 Business Standard

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Categories: Jet Airways Jan 2012