Boeing ‘concerned’ over Jet Airways’ financial situation

Jet Airways reported a net loss of Rs 1,323 crore and as of June 30 2018, it had gross debt of Rs 8,620 crore, of which Rs 1,968 crore was related to aircraft.

Written by Pranav Mukul | New Delhi | Updated: October 13, 2018 1:40:38 pm
In its widebody fleet, Jet Airways operates a mix of Boeing’s 777 and Airbus A330 aircraft. (Reuters)

US-based aircraft manufacturer Boeing is concerned with the situation of cash-strapped Jet Airways given the fare levels at which Indian airlines are operating. Dinesh Keskar, senior vice-president, Asia-Pacific & India sales for Boeing Commercial Airplanes, said on Friday that in the airline business there are entities with deep pockets that can sustain the rising fuel prices but some companies, which are operating with working capital set aside on day-to-day basis, were the cause for concern.

“We’re concerned. Are we watching? Absolutely. But we just delivered five 737 MAX aircraft to them and we will continue to work with them,” Keskar told The Indian Express, when asked if Boeing was worried about the airline’s situation. In its fleet of 124 aircraft, Jet Airways has 82 Boeing 737s including different variants such as Boeing 737-700, 737-800, 737-900 and 737-900ER and this narrow body aircraft is its workhorse for domestic and short-haul international operations. In its wide body fleet, Jet Airways operates a mix of Boeing’s 777 and Airbus A330 aircraft.

In August, Boeing reportedly returned $200 million to Jet Airways, which it paid to the US company as part of its order for the Boeing 737 MAX placed in 2015.

“In this business, you can’t get too many new customers every day. It is in our interest to keep airplanes don’t fly, therefore don’t make any revenue, which means things are going into a spiral in the wrong direction. We want to make sure they’re flying. At the fare levels you have had for the last two-three months, that is our concern. If you have deep pockets, you can sustain longer. In our business there are people who have funds and there are people who are literally working through working capital on a day to day basis. That’s where the concern comes from,” he added.

For the quarter ended June, Jet Airways reported a net loss of Rs 1,323 crore and as of June 30 2018, it had gross debt of Rs 8,620 crore, of which Rs 1,968 crore was related to aircraft. The airline’s accumulated losses stand at Rs 10,878 crore and it is currently working on a turnaround plan to save Rs 2,000 crore over a couple of years through several initiatives that the board had approved in August.

Even as the operating costs of airlines have increased in recent months due to higher oil prices and depreciating rupee, fares have not been hiked as much on account of stiff competition in the sector led primarily by rapid addition of capacity by airlines on domestic networks.

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