Jet Airways and its stakeholders of late haven't really been experiencing the joy of flying, thanks to the financial woes dogging the carrier. The airline, which is reeling under a debt of about Rs 1,800 crore, is now reportedly planning to sell six of its Boeing 777 aircraft, and the amount received from the sale will be used to clear dues.
Speaking of the plan, Jet Airways chief financial officer Amit Agarwal told analysts on Tuesday that six aircraft have been identified for the purpose.
"The airline has identified six Boeing 777 aircraft, which it will sell to lessors under sale and leaseback and use the proceeds to pay most of the aircraft debt," Livemint quoted Agarwal as telling the analysts.
The sale and leaseback process is one in which an airline sells its aircraft to a buyer and then leases it from the latter for operations. By doing this, the balance sheet of the carrier is cleared of the aircraft, as well as, all the liabilities associated with it.
The full-service carrier also plans to finance the purchase of additional Boeing 737 Max aircraft through the sale and leaseback process and may sell the remaining 10 planes that it owns.
Agarwal also said that Jet will receive 15 new Boeing 737 Max aircraft in fiscal 2020, and remove 75 old Boeing 737 aircraft from service by 2025.
To improve its financial situation, Jet also said that it will restrategise its business module on routes that aren't profitable and also hopes that the fares will rise soon.
The Naresh Goyal-owned airline has consistently been making losses, due to which Goyal was said to be looking for a new investor to raise working capital. He had reportedly spoken to Mukesh Ambani and Ratan Tata, and on November 13, Livemint had reported that the Tata Group had already started conducting due diligence of the carrier.
However, Jet Airways has called the report speculative, declining to make any comments on the matter. "...The subject news is speculative in nature and that there is no discussion or decision in the board which would require a disclosure...," Jet Airways said in a response, according to the Press Trust of India.
It was earlier also reported that the management of the carrier had told its pilots that it may have to ground about 23 Boeing 737 aircraft to cut costs.
The issue was raised during a meeting with the National Aviators Guild (NAG), the pilot union of Jet, on October 9, attended by the carrier's CEO Vinay Dube, and chief people officer Rahul Taneja. "The management suggested it is looking at grounding 23 Boeing 737s operating on domestic routes to mitigate losses," one of the senior pilots, who was at the meeting, told the Financial Express.
However, Jet Airways has denied the reports of 23 Boeing 737s being grounded, calling the information "factually incorrect" and "misleading."
"Jet Airways categorically denies your information which is factually incorrect and misleading. The airline also urges the publication to refrain from reporting speculative information being circulated via sources with malicious intent," a Jet Airways spokesperson told the Financial Express.