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Jet plans to focus more on single-aisle planes

Though the airline did not specify reasons for this shift in strategy, it may be noted that single-aisle planes are more economical and are good for feeder/short-haul services.

Updated: May 27, 2013, 21:34 PM IST

Mumbai: Naresh Goyal-promoted Jet Airways Monday said it is planning to buy more single-aisle aircraft from Boeing, amid the airline seeking to operate code-share flights with Etihad Airways connecting as many as 23 domestic destinations with Abu Dhabi by 2016.

"We are contemplating placing another round of Boeing 737 orders," Jet Airways senior vice-president for commercial finance and investor relations K G Vishwanath said at a post-earnings concall with analysts.

Though the airline did not specify reasons for this shift in strategy, it may be noted that single-aisle planes are more economical and are good for feeder/short-haul services.

Vishwanath, however, did not divulge the order size or timeline for the intended purchase.
According to a recent report by the aviation think tank, Centre for Asia Pacific Aviation, Jet is expected to order over 100 planes from Boeing and Airbus at the Paris Airshow slated for next month.

The airline, which is awaiting regulatory approval for its 24 percent stake sale to the Gulf carrier Etihad, is currently taking deliveries of 46 Boeing 737-800s from an earlier order.

Besides, it will also take delivery of 10 Boeing 787s from 2017. The airline had placed orders for these aircraft a few years back.

The airline also said its is leasing three of its six grounded Airbus A330-200s to Etihad.

"We have six Airbus 330-200s on ground as we pulled out certain loss-making routes. We have already leased one of them to Etihad and the remaining two will be leased to it later," Vishwanath said.

He also said the carrier plans to retire USD 500-550 million of its debt this fiscal out of the total USD 2.1 billion.

Last week, during its EGM, Vishwanath had said its proposed deal with Etihad will help the carrier bring down debt to USD 1.5 million.

"Of the total USD 2.1 billion debt, USD 700 million is on account of working capital which has been borrowed at high interest rates while the remaining USD 1.4 billion is aircraft-related loans. Etihad's investment, which runs to around USD 750 million including the USD 369 million being paid for the 24 percent stake sale, would help us reduce the high-cost debt," he had said.

"We will be having another incremental cash flow of USD 200 million as a result of Etihad equity deal," Vishwanath told the analysts Monday.

In addition, the airline also plans to mop up another USD 300-350 million through aircraft sales and lease back, he said.

Jet group chief commercial officer Sudheer Raghavan said the carrier continues its efforts to bring down the costs and increase the profitability.

"We continue in our endeavour in cutting costs. The sale-and-leaseback of aircraft will help us in the medium-to-long term. We are selectively adding flights to the profit-making markets such as the Gulf and the Asean region and discontinuing loss-making routes," he said.

"The alliance with Etihad will bring significant benefits to passengers with expanded code sharing, creating a combined network of 140 destinations. The strategic investment will deliver wide-ranging revenue growth and cost synergy opportunities for both the airlines," he said.

Last weekend, the airline had reported higher losses in the March quarter at Rs 495 crore, up from Rs 298 crore a year ago, on account of high fuel prices and weak rupee, which had also brought down its total income from operations by 3 percent to Rs 3,921.92 crore from Rs 4,041.61 crore a year ago.