>JET AIRWAYS (IDFC SSKI)

HIGHLIGHTS

‘We have already cut domestic capacity by ~20% yoy....exceptional efforts will be required for profitability going ahead’– Wolfgang Prock - Schauer CEO, Jet Airways

• Jet Airways (Consolidated) has reported numbers for FY09 – Revenues were at Rs130.7bn (ahead of estimates at Rs126bn), EBITDA loss at 8.6bn (against expectations of Rs8.9bn) and net loss of Rs21.2bn without exceptional items (Jet has reported a consolidated net loss of Rs9.6bn including exceptional items for the year).

• For the quarter - Jet Airways (standalone) has reported an 11% decline in revenues at Rs24.6bn, a positive EBITDAR at Rs5.1bn, EBITDA at Rs3bn (primarily due to the support from international operations and lower ATF prices in the quarter) and a net loss before exceptional items at Rs1.6bn.

• For the quarter - Jetlite has reported revenues at Rs3.1bn, a positive EBITDAR at Rs165mn, and continued to post an EBITDA loss at Rs717m and a net loss of Rs1.3bn.

• Capitalization concerns high - Jet reported consolidated debt at Rs166bn taking the debt:equity ratio to ~5X. Repayment in the current year is at ~Rs10bn. Additional outstandings for the current year include a Rs 1.4bn payment to SICCI (annual installment for the acquisition of Jetlite erstwhile Sahara).

• No capacity additions in the current year – The management is in talks with Boeing over cancelling/finding another buyer for the Boeing 777 (Capex at ~$145m) that was due for delivery in August09 (Jet had earlier deferred all future deliveries except the Boeing 777). The current operational fleet (86 aircrafts under Jet and 23 aircrafts under Jetlite) is expected to be maintained as of now. (The management plans to renew the leases that come for expiry in the current year).

• Options to fund - Sale and lease back – Inorder to meet its obligations, Jet has the option of a sale and lease back of its existing assets (39 owned planes – 21 narrow bodied aircraft and 18 wide bodied aircraft). While Jet has booked a sale and lease back of an A330 in the current quarter at a $9m profit over its book value (leading to a cash inflow of ~$85m), a premium to book value could be difficult in the current environment. Till date Jet has raised ~$2.5bn inorder to fund the acquisition of its fleet; a sale (at book value) of these assets by the end of the current year can
potentially generate cash (net of repayment of loans) to the tune of ~Rs15-18bn.

To see full report: JET AIRWAYS