Sale of wide-body aircraft will not affect internatinal flights, says Jet
Jet Airways plans to sell or sale-and-lease-back all its wide body Boeing 777 and Airbus A330 planes to raise cash and retire a portion of its Rs 12,000 crore (Rs 120 billion) debt.
Jet Airways has a fleet of 117 planes which includes a mix of turboprop, narrow body and wide body planes. It flies the Boeing 777s and Airbus A330s to London, Paris, Brussels, Newark, Toronto and Hong Kong.
While the airline says it has no plans to reduce its international operations, the management is exploring both an outright sale or sale and lease back of its wide body planes to raise cash.
The airline has 22 wide body planes (10 Boeing 777s and 12 Airbus A330 aircraft). Six A330s are on operating lease and the remaining sixteen are on a financial lease.
Currently Jet Airways does not fly all its wide body planes. It only uses five Boeing 777s and seven A330 aircraft and has leased the remaining ten aircraft to Etihad Airways and Turkish Airlines.
The Boeing 777-300ERs planes being flown by Jet Airways service have been manufactured in 2007 and 2008.
International Bureau of Aviation (IBA), an consultancy firms which carries out aircraft valuation puts the current market value of a single Jet's 777 aircraft from $ 89.8 million to $97 million (around Rs 550-600 crore) Similarly IBA values a single Jet's A330-200 plane which entered service in 2008 at $58.4 million (around Rs 360 crore).
"Jet Airways is evaluating several options to optimise the fleet inventory in context of our ongoing network evaluation to drive sustainable profitability," an airline spokesperson said.
Last July the airline announced a three year business plan to return to profitability by 2017. The airline had then said it would explore sale of some of its wide-body aircraft and restructure its debt, besides removing some complexities in its fleet, product and brand. The airline posted a record Rs 3667 crore (Rs 36.67 billion) loss in fiscal 2013-14. It made a consolidated profit of Rs 3 crore (Rs 30 million) in Q3 FY 2015, the first quarterly profit in December 2012.
"Jet Airways plan to put on sale its Boeing 777s is perplexing. The Boeing 777 is its workhorse on high density routes and is also an in demand aircraft. What is the compulsion to sell the plane now," asked Devesh Agarwal, editor of aviation blog Bangalore Aviation.
Analysts feel in near term Boeing 777-300ER prices will remain stable though new fuel efficient variant aircraft are being launched in service.
"Over the next ten years a large number of new technology aircraft will enter the service such as A330neo, 787-10 and 777x. Fuel pricing will be the key to success of longer range aircraft so a drop in fuel price will keep the older Boeing 777s and A330s to fly for longer period.
We expect Boeing to lower the 777-300ER aircraft pricing in order to bridge the gap between that last orders (of 777-300ER) and the first deliveries of the 777x plane which is due to enter service in 2019," said IBA's commercial director Owen Geach.
