Jet in talks for aircraft sale & leaseback

With the Bombay high court clearing the decks for settlement of its long-standing feud with Sahara, Jet Airways has initiated talks for sale and lease back of some of its Boeing aircraft.

The Naresh Goyal-promoted company is also hopeful of closing the development deal for its Bandra Kurla Complex (BKC) plot in Mumbai in two weeks.

“The airline is in talks for a sale and lease back for some of the planes and there are proposals for the entire fleet, but we will not go for all of it in one shot,” a senior official stated during an earnings call on Friday.

Jet has 21 aircraft available. A sale and lease back is expected to bring in cash flow of $8-9 million per aircraft.

Company officials said the number of planes for this kind of an arrangement has not been decided. Sale and lease back is a common practice amongst airlines wherein the carrier sells its aircraft to leasing companies at a higher value and leases them back at monthly rentals.

The airline is also optimistic of selecting a developer for its BKC plot in two weeks. Godrej Properties and Jet Airways were in talks to develop this plot.

“The development deal should be through in two weeks. I would not be able to confirm or deny (whether it will develop the plot with Godrej or is in talks with other players),” M Shivkumar, senior vice-president- finance, Jet Airways told DNA.    

“The company would make an announcement only when the deal happens,” a Godrej spokesperson stated.

Further, Jet Airways plans to repay debt worth Rs1,900 crore this fiscal. It has total debt of around Rs13,000 crore.

The quoted debt repayment would include debt raised for the BKC land parcel. “With the BKC deal, at the minimum the holding of debt worth $ 81 million can be released,” a senior official said.

Six 737 Boeing are expected to join the airline fleet. These would start coming in starting from October this year. At the moment, the airline has seven aircraft leased to other airlines, it expects to reduce this number to five this fiscal.

“We expect the irrational prices to prevail in the market, but the market has learnt to live through this,” a senior official said.
Air India recently slashed prices to attract customers, as its operations were hit due to a prolonged pilot strike. The national carrier had gone for a similar price cut in January.

For the quarter ended March, Jet posted a net loss of Rs200.2 crore compared with Rs224.8 crore profit in the same period last year. Senior officials said high fuel cost and certain tax payments also affected the quarterly numbers.