Feb. 10--MUMBAI -- Jet Airways (India) Ltd, the nation's largest airline by passengers carried, said it is in the process of raising at least $300 million (around Rs.1,860 crore) by borrowing from overseas, and in India to retire high-cost debt.
The airline is in the process of raising $150 million and has separately sought the Reserve Bank of India's (RBI) approval for raising another $150 million via external commercial borrowings (ECB), Ravishankar Gopalakrishnan, chief financial officer and acting chief executive officer, said in a conference call with investors on Monday.
The overseas money and some other low-cost loans raised from the domestic market will help the airline retire high-cost debt, he said.
"With the support of Etihad Airways' bankers, we have got sanction for $150 million ECB and documentation of the same is in the process. Separately, we have got sanction from a bank from Middle East for another $150 million," Gopalakrishnan said.
He said his airline will replace $300 million high-cost Indian rupee loan straight away, resulting in saving $30 million on interest costs.
Gopalakrishnan said Jet Airways had reduced its debt from Rs.12,494.70 crore in September to Rs.10,895.20 crore in December.
Jet Airways had lost of Rs.267.89 crore for the three months ended December, considered a peak season for domestic airlines because of festivals and holidays falling in the period. The airline warned of continuing weakness in the ongoing quarter that's typically a lean season. This was the company's fourth straight quarterly loss, reflecting problems that affect not just Jet Airways but also other Indian airlines -- high operating costs and irrational pricing. The Naresh Goyal-promoted airline had posted a profit of Rs.85 crore in the quarter ended 31 December 2012.
The loss in the latest quarter came after the airline was buffeted by some of its bigger aircraft sitting on the ground, a steep fall in the value of the local currency and intensifying competition. The company, in which Etihad Airways PJSC has bought a 24% stake, posted a 7.85% increase in sales to Rs.4,535.87 crore.
In November, the Competition Commission of India (CCI) cleared the Rs.2,058 crore Jet-Etihad deal that involves Abu Dhabi-based Etihad Airways buying a stake in Jet Airways, the first such investment since the government allowed foreign airlines to invest in their Indian counterparts. The cabinet cleared the deal on 4 October.
In the December quarter, Jet Airways sold two wide-body Airbus A330 planes and the balance access capacity is expected to be sold or leased out by end of February, resulting in saving of $17 million, Gopalakrishnan said.
Jet Airways would be able to save another $50-60 million on interest cost through various other initiatives, he said.
Raj Sivakumar, senior vice-president (alliances and planning) at Jet Airways, said the airline is in the process of planning its strategy in the wake of a safety rankings downgrade by Federation Aviation Administration (FAA), the US regulator.
The US's downgrade reduces India to a safety category that includes Ghana, Indonesia, Uruguay and Zimbabwe, and means that state-run Air India Ltd and Jet Airways -- the two Indian airlines that fly to US destinations -- wouldn't be allowed to expand flights and their existing flights would be subjected to additional checks.
Copyright 2014 - Mint, New Delhi
The airline warned of continuing weakness in the ongoing quarter that's typically a lean season.
India's second largest airline by market share will be the first Indian carrier to use the fuel-saving aircraft.
Airlines would have to snap ties with American counterparts, a move that may have an impact on Air India's entry into the prestigious Star Alliance.
Joining Star Alliance means Air India passengers will be able to fly on a network of 21,900 daily flights to 1,328 airports in 195 countries.