After posting its worst-ever quarterly loss of ₹1,323 crore in the three-month period ending June 30, Jet Airways on Tuesday spoke of an ambitious plan to cut its debt by ₹2,200 crore this fiscal and improve its top line.

To achieve the ₹2,200-crore debt-reduction target, the airline is embarking on a multi-pronged strategy. “We have identified various measures to cut down our costs and these include inducting fuel- and cost-efficient Boeing 737 MAX, monetising the JetPrivilege programme, restructuring the balance-sheet though capital infusion, and leasing out ATRs in a fleet-simplification move,” Jet CEO Vinay Dubey said during an investors’ call on Tuesday.

Dubey said the low-tariff regime needs to end for the industry to thrive. He said that at current fare levels, the industry cannot sustain for long, given that fuel prices have more than doubled in the last couple of years while fares have remained mostly stagnant. Jet Airways posted ₹1,000-crore-plus loss for the second consecutive quarter, led by rising fuel costs and depreciating rupee. In the previous quarter (January-March), losses stood at ₹1,036 crore.

Dubey pointed out the airline has no differences with either of its auditors and both will continue to work with the company. Moreover, he said all the company bank accounts are ‘standard’ and that it has not delayed any payments to banks.

Salary cut and layoff

Dubey said he expects the company to grow at a CAGR of 9-10 per cent and “that’ll require more people, not less,” putting an end to the talk that the airline could be laying off some of its staff or cutting salaries to prune costs.

Sale and lease back

Dubey said that the airline has no plans to cut back on its order of 225 Boeing 737 Max aircraft, delivery of 11 of which is due this fiscal.

Jet Airways is also looking at sale and lease back of all 16 of the aircraft it owns, including the wide-bodied Boeing 777s.

Amit Agarwal, CFO, said the 16-aircraft fleet is worth $750-800 million, which alone can wipe out a large portion of the company’s debt.

“These 16 aircraft are worth about $750-800 million as they include ten Boeing 777s. A large equity is sitting there. We have identified them for sale and lease back,” Agarwal said.

Jet Airways’ debt, which stood at ₹8,620 crore as of June 30, went down by ₹700 crore primarily due to the sale and lease back of aircraft, Agarwal said.

Agarwal said the airline was also able to raise $300 million through some fresh debt and lease incentives.

Maintenance would be another area where Jet Airways is looking at cutting down costs. Agarwal said the company has already renegotiated maintenance contracts for its aircraft and from January 1, 2019, there will be a reduction of ₹615 crore on the maintenance bill alone.

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