Jet Airways to sell 6 Boeing 777 jets to clear debt

MUMBAI: Jet Airways (India) Ltd plans to sell six Boeing 777 planes, a top company executive said, as the cash-strapped airline aims to clear most of its aircraft-related debt, which stands at about ₹1,800 crore.

“The airline has identified six Boeing 777 aircraft, which it will sell to lessors under sale and leaseback and use the proceeds to pay most of the aircraft debt,” Jet Airways chief financial officer Amit Agarwal told analysts at a post-earnings call on Tuesday.

Jet Airways had a net debt of ₹8,052 crore at the end of the quarter that ended on September 30, 2018. It had a net debt of ₹7,364 crore as of June-end. While 60% of the airline’s debt is dollar denominated, its aircraft debt stands at ₹1,800 crore.

Jet Airways has 124 aircraft, according to its website. Of this, it owns 16 aircraft, mostly widebody planes, while the rest are on sale and leaseback from lessors.

A sale and leaseback is a transaction in which the owner sells the aircraft and then takes it back on lease from the buyer. This kind of deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.

Jet Airways will also finance the purchase of its 225 Boeing 737 Max aircraft through the sale and leaseback mechanism. It will also evaluate the sale of 10 remaining aircraft that it owns.

The airline will also phase out 75 older Boeing 737 aircraft by 2025 and take delivery of 15 new Boeing 737 Max aircraft in fiscal 2020, Agarwal said.

In 2015, Jet Airways had placed orders for 75 Boeing 737 Max aircraft. It ordered another 75 earlier this year. In a regulatory filing in June, it had said that it would acquire 75 more, taking the total order size of its Boeing 737 Max fleet to 225.

The airline has already taken delivery of five Boeing 737 Max airplanes during the first half of the current fiscal, and will take delivery of another six more such planes before the end of the fiscal.

Country’s second-largest airline has a long-term growth projection to increase its capacity by 8-10% a year, on back of the additions of Boeing 737 Max aircraft.

Going ahead, Jet Airways will rationalize its operations in unprofitable routes, the airline’s CEO Vinay Dube said, adding that the airline expects fares to rise in the short term.