Jet Airways needs to raise funds, warn auditors

Nov 22, 2011 |

Reuters

mumbai

Tags:

The auditors of India’s biggest carrier Jet Airways have warned the company needs to raise funds or generate cash flows in the future to meets its obligations, including financial support to its loss-making subsidiary JetLite.

Deloitte Haskins & Sells and Chaturvedi & Shah said in a report dated November 11 that raising money is crucial if Jet's accounts have to be prepared on a "going concern basis" in the future. The report was released to the stock exchange on Monday.

In September, auditors of smaller rival Kingfisher Airlines had warned the carrier needed to infuse funds to continue as a "going concern".

Jet, which enjoys nearly a quarter of the market share, swung to a net loss in September quarter, compared with a profit a year ago, hurt by rising fuel prices and a forex loss in the quarter.

"Jet is better relative to Kingfisher in terms of financial strength. I definitely think they will make a profit over the time and shore up their capital," said an analyst with a local brokerage who requested anonymity.

The company's shares rose as much as 4.5 per cent in early deals on Wednesday, despite the auditor's comments. At 12.31 pm. (0701 GMT), they were up 3.95 per cent at 248.6 rupees.

"Jet has a different business model. They have a preponderous international fleet, adequate flight strength and they have been able to protect their market share. It will be able to meet its obligation to service debt," the analyst added.

Shares of the carrier, valued by the market at over $400 million, have lost as much as 67.5 per cent of their value in 2011.

Earlier in November, Jet had said it was looking at several "non-payroll areas" at cutting costs including plans to sell and lease back aircraft as well as cut interest costs by converting rupee loans into dollar debt.

Reuters could not immediately reach company executives for a comment.

India's airline sector is struggling under rising fuel costs and a heavy debt burden, making it tough for them to
raise funds and forcing cancellation of aircraft orders.

The Centre for Asia Pacific Aviation (CAPA) has forecast a record $2.5-$3 billion loss for Indian airlines for the year ending March 2012.

Post new comment

<form action="/comment/reply/108788" accept-charset="UTF-8" method="post" id="comment-form"> <div><div class="form-item" id="edit-name-wrapper"> <label for="edit-name">Your name: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="60" name="name" id="edit-name" size="30" value="Reader" class="form-text required" /> </div> <div class="form-item" id="edit-mail-wrapper"> <label for="edit-mail">E-Mail Address: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="64" name="mail" id="edit-mail" size="30" value="" class="form-text required" /> <div class="description">The content of this field is kept private and will not be shown publicly.</div> </div> <div class="form-item" id="edit-comment-wrapper"> <label for="edit-comment">Comment: <span class="form-required" title="This field is required.">*</span></label> <textarea cols="60" rows="15" name="comment" id="edit-comment" class="form-textarea resizable required"></textarea> </div> <fieldset class=" collapsible collapsed"><legend>Input format</legend><div class="form-item" id="edit-format-1-wrapper"> <label class="option" for="edit-format-1"><input type="radio" id="edit-format-1" name="format" value="1" class="form-radio" /> Filtered HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd></li><li>Lines and paragraphs break automatically.</li></ul></div> </div> <div class="form-item" id="edit-format-2-wrapper"> <label class="option" for="edit-format-2"><input type="radio" id="edit-format-2" name="format" value="2" checked="checked" class="form-radio" /> Full HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Lines and paragraphs break automatically.</li></ul></div> </div> </fieldset> <input type="hidden" name="form_build_id" id="form-87fc5711639999f13d87d4bf7618763a" value="form-87fc5711639999f13d87d4bf7618763a" /> <input type="hidden" name="form_id" id="edit-comment-form" value="comment_form" /> <fieldset class="captcha"><legend>CAPTCHA</legend><div class="description">This question is for testing whether you are a human visitor and to prevent automated spam submissions.</div><input type="hidden" name="captcha_sid" id="edit-captcha-sid" value="81038048" /> <input type="hidden" name="captcha_response" id="edit-captcha-response" value="NLPCaptcha" /> <div class="form-item"> <div id="nlpcaptcha_ajax_api_container"><script type="text/javascript"> var NLPOptions = {key:'c4823cf77a2526b0fba265e2af75c1b5'};</script><script type="text/javascript" src="http://call.nlpcaptcha.in/js/captcha.js" ></script></div> </div> </fieldset> <span class="btn-left"><span class="btn-right"><input type="submit" name="op" id="edit-submit" value="Save" class="form-submit" /></span></span> </div></form>