Jet Airways to see short term increase in debt level in next few quarters

Jet Airways on Thursday said the company expects an increase in debt level in next one to two quarters as the high cost is adversely impacting its cash flow. The airline had gross debt of Rs 84.24 billion at the end of March end.

“For a quarter or two, our debt level will go up. There will be a short-term blip,” said Amit Agarwal, airline's deputy chief executive officer in post result conference call on Thursday.

Over the last three years, the airline has lowered debt by around Rs 30 billion and efforts are underway to reduce it further, Agarwal said. Jet's Rs 84.24 billion debt comprises Rs 20.54 billion of aircraft acquisition loans and around 65 per cent of is dollar denominated.

Jet Airways posted Rs 10.40 billion loss in the fourth quarter FY 18 owing to high costs and a decline in other income. This included engine overhaul costs of Rs 2.53 billion which the airline said is recurring in nature.

The airline has a negative net worth and its auditor has made an observation regarding its ability to continue as going concern. The airline stock fell 7 per cent to Rs 391.55 following weak result.

Jet management, however, said its non-fuel cost reduction plan is on track and aims to maximise revenue by redesigning its network and use of analytics. The airline also hinted at correction in airfares which have remained flat over last two years.

While its capacity deployed increased 10.1 per cent and the number of passengers 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 price and airfares in coming months globally but did not specify how soon fares could rise in India and how much. Chief executive officer Vinay Dube hinted that 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 categories 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 loads in premium cabins on Mumbai-Paris route.