Jet to see short-term rise in debt
Jet Airways expects an increase in the debt in the next one or two quarters as high cost is taking a big toll on its cash flow. The airline had a gross debt of ~84.24 billion at the end of March. “For a quarter or two, our debt level will go up. There will be a short term blip,” said Amit Agarwal, the airline’s deputy chief executive officer in conference call after the results on Thursday. Over the last three years, the airline has lowered debt by around ~30 billion and efforts are under way to reduce it further, Agarwal said. Jet’s ~84.24 billion debt comprises ~20.54 billion of aircraft acquisition loans and around 65 per cent of this is dollar denominated. Jet Airways posted ~104 million loss in the fourth quarter FY18 owing to high costs and decline in other income. This included engine overhaul costs of ~2.53 billion which the airline said is recurring in nature. The airline has a negative net worth and its auditor has made observation regarding its ability to continue as a going concern. The stock dropped 7.03 per cent to settle at ~391.55 on the BSE. Jet’s management, however, said its non fuel cost reduction plan is on track and aims to maximise revenue by redesigning its network and by use of analytics. The airline also hinted at correction in airfares which have remained flat over the last two years. While its capacity deployed increased 10.1 per cent and number of passengers flown grew 11.8 per cent, the total revenue went up only 8.1 per cent as average revenue per passenger declined by a per cent. The airline expects a balance in fuel prices and airfares in the coming months globally but did not elaborate on how soon fares could rise in India and by how much. Chief executive officer Vinay Dube hinted that the airline may be able to pass on high fuel costs as a large share of its traffic comprises corporate passengers who are less price-sensitive than other category of travellers. Dube said the airline’s new partnership with Air France-KLM was delivering results and this had resulted in 18 per cent growth in passenger load in premium cabins along the Mumbai-Paris route.