Jet Airways Ltd is having discussions to merge its two low-cost brands – Jet Konnect and JetLite.
The company expects to make a decision on the merger in one-two months.
“We will have only one low cost brand and one full service brand. We are still having discussions on how to go about the merger and decision is expected to be made soon,” said Mr K.G. Vishwanath, Vice-President (Commercial Strategy and Investor Relations), Jet Airways India Ltd.
JetLite was formed after Jet Airways purchased the airline business of the Sahara Group in 2007. It has a fleet of 18 Boeing 737 aircraft.
In domestic operations, Jet Konnect accounts for 75 per cent of the flights while Jet Airways has 25 per cent of the total domestic flights of the Jet Airways group.
Both the low-cost carriers are struggling to garner high yields in an atmosphere of dropping fares and increasing aviation turbine fuel rates.
Mr Vishwanath said that that both Jet Konnect and JetLite had cut fare levels below costs, and such irrational pricing continued to be a norm in the sector.
“With such a pricing scenario it has become difficult for Jet Airways to increase fares to pass on the high fuel cost to passengers,” he said. The airline has no plans to increase fares as of now, he added.
Adding new aircraft
Jet Airways also plans to add six new aircraft for its domestic operation and four aircraft for international routes by October 2012.
“We are looking at a muted capacity expansion,” said Mr Vishwanath. The company is also looking at an option of sale and leaseback of 3-4 aircraft during the current quarter to raise funds.
“The lessor has already sent in their letter of interest and 3-4 aircraft could be sold and leased back during the quarter,” said company officials during an analyst call on Monday.
A single sale and leaseback can fetch the company around $8-9 million.
The company's cash and cash equivalents stands at Rs 5 10 crore while its debt stands at Rs 13,200 crore.
The average cost of debt is 5.8 per cent annually and had dropped as Jet Airways converted high-interest rupee debt to lower-interest cost dollar debt.
The company expects to repay debt worth Rs 1,100-1,200 crore during the 2011-12 financial year, said Mr Vishwanath.