Mumbai: Jet Airways (India) Ltd, the nation’s second largest airline by passengers carried, will stick to its cost-cutting plan without impacting profitability and pay off $400 million of debt in the next financial year.
The airline had a total $2.16 billion of debt as of 31 December 2012, down from $2.6 billion at the end of March that year.
The airline, said to be close to a deal to sell a stake to Etihad Airways PJSC, is steadily paying off debt and the airline has got commitments from banks for working capital, K.G. Vishwanath, vice-president, commercial strategy and investor relations, told analysts on a conference call Monday.
The airline has repaid nearly $400 million in the current fiscal and another $400 million will be paid next fiscal, said Vishwanath, who added that the average cost of debt for the airline is around 6%.
Jet executives declined to divulge details about discussions with Etihad.
The airline has reconfigured its wide-bodied planes to increase profitability, said Sudheer Raghavan, chief commercial officer. The airline gets 56% of its revenue from international operations and the rest from domestic operations, Raghavan said.
Asked about the competition faced by Indian low-fare airlines, he said they have had to pull out from many international routes, including Singapore while Jet Airways is doing better owing to its network strength, he said.
Jet Airways swung to a profit in the third quarter, ahead of a likely deal that will see Etihad acquiring a stake in the airline.
The two sides are in the final rounds of discussion, with the United Arab Emirates (UAE) national airline poised to buy a 24% stake for around $300 million, according to people familiar with the terms.
Indian ministers have backed a possible deal.
Jet Airways reported a net profit of Rs 85 crore in the quarter ended December against a net loss of Rs 101.22 crore in the year-ago period. Sales rose 6.76% to Rs 4,205.77 crore.
The airline had been expected to post a net profit of Rs 34.01 crore in the third quarter on revenue of Rs 4,720.70 crore, according to a Bloomberg survey of six analysts.
On Monday, Mint reported that Jet Ariways will not cede management control to the United Arab Emirates firm, citing Jet Airways chairman Naresh Goyal. The Indian government in September allowed foreign airlines to buy up to 49% of a domestic airline. Jet and Etihad have been in talks since then but a deal is yet to be announced.