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Jet mulls funding via sale and lease deals

India's fast-growing Jet Airways may abandon a plan for a $150 million-$250 million private equity placement in favour of raising cash other ways, a senior company source said.

The country's second-largest airline is considering drumming up the money through sale and possible leaseback of aircraft, the source said.

The unlisted airline has just struck a deal to sell two older Boeing 737-400 aircraft and replacing them with two leased Boeing 737-700s. The fund-raising would also be boosted by the sale of other assets.

"We're working at raising funds quickly. The private placement may be dropped as it's taking longer than expected. But we have not taken a final decision yet on that plan," said the source, who did not wish to be identified.

The company was considering abandoning the private placement plan because of poor market conditions, he said.

Jet Airways, which has a fleet of 28 Boeing 737s, is in the second phase of its fleet expansion and has ordered 10 new Boeing 737s of which it has already taken delivery of three. Two more of this batch will join its fleet by year-end.

FAST GROWTH, AND PROFIT

Jet Airways was founded in 1992 and is owned by entrepreneur Naresh Goyal.

It holds 42 per cent of the domestic market and is gaining fast on market-leader Indian Airlines, a state-run airline which returned to loss in the year to March after a three-year profit-making run.

Jet Airways, though not releasing exact figures, said it ended the year to March with a profit and will post a profit this year as well.

"Our growth has come from attracting the high-quality passenger," CEO Steve Forte told reporters on the sidelines of a product launch earlier this week.

Jet now operates 221 flights to 43 destinations daily. It is also operating a fleet of small propeller-driven aircraft.

EQUITY EXPANSION

Jet Airways wants to bring down its 4:1 debt-equity ratio and proposed the private placement plan for expanding equity, which stands at $25 million.

It has already secured loans to fund the current fleet additions but says an infusion of more money is needed for future projects.

India's domestic airline market -- divided between Indian Airlines, Jet Airways and tiny Air Sahara -- posted healthy 12 per cent growth last year with the number of passengers reaching 13 million. But first-quarter growth slowed to 1.4 per cent, reflecting a widespread economic downturn.

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