Jet to cancel a Boeing 777 plane order

Working towards cutting excess capacity, Jet Airways is negotiating with aircraft manufacturer Boeing to cancel its order for a B777 jet, worth Rs 725 crore, which is scheduled for delivery in August.     

"The management is in talks with Boeing over canceling/finding another buyer for the Boeing 777 (Capex at $145 million) that was due for delivery in August 2009," brokerage firm IDFC-SSKI said in a report on Jet Airways after a management interaction.     

When asked if Jet is canceling the order for a B777 aircraft scheduled for delivery August 2009 or finding another buyer for the airplane, the company spokesperson said, "Jet Airways is scheduled to take delivery of a Boeing 777 in July 2009. We are currently in discussions with Boeing in this regard".      

The carrier has already reduced capacity on its network by 20 per cent and plans further capacity cut.     

"We have already reduced our capacity by 20 per cent and will do another 10 per cent," Jet Airways Chairman Naresh Goyal had said in Kuala Lumpur earlier this week.     

While declaring Q4 results last month, Jet had said that anticipating challenging times for the sector, it has initiated a cost reduction exercise which includes deferring aircraft deliveries for the next one to two years.

Jet has leased out nine long haul aircraft, which had became surplus as a result of efforts to eliminate excess capacity.     

"The global economic environment coupled with economic realities of the airline industry in India requires exceptional efforts to return to breakeven and profitability. We expect the year ahead to be challenging in terms of continued sluggish demand for both domestic and international operations," the airline had said.     

The company's other cost reduction steps include rationalising personnel costs, restructuring of aircraft leases, debt restructuring and maximising JetLite and Jet Airways synergies.