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Fuel contract renegotiations key; interest savings to further boost earnings
With rising concerns of oil price increase, Jet’s fuel contracts with its suppliers will give it a competitive advantage. The
airline is planning to further reduce its 60 day credit period and consequently get more price discounts from its fuel
suppliers. Further, Jet believes that passing on fuel price increases to customers will not affect demand growth.
Jet does not intend to increase its debt going forward. Additions to its fleet will be done through sale and lease back
transactions.
Jet is confident about its favourable outlook and plans to increase domestic and international market share as new aircraft
join the fleet.
Valuation and risks
We value Jet using FY11e multiples of Cathay Pacific and Air China, as well as its own 2005-07 PB trading range. We set
the fair value of Jet at the mid-point of the range. Our target price is INR750.
Key risks are fuel price spikes and US dollar strength.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Fuel contract renegotiations key; interest savings to further boost earnings
With rising concerns of oil price increase, Jet’s fuel contracts with its suppliers will give it a competitive advantage. The
airline is planning to further reduce its 60 day credit period and consequently get more price discounts from its fuel
suppliers. Further, Jet believes that passing on fuel price increases to customers will not affect demand growth.
Jet does not intend to increase its debt going forward. Additions to its fleet will be done through sale and lease back
transactions.
Jet is confident about its favourable outlook and plans to increase domestic and international market share as new aircraft
join the fleet.
Valuation and risks
We value Jet using FY11e multiples of Cathay Pacific and Air China, as well as its own 2005-07 PB trading range. We set
the fair value of Jet at the mid-point of the range. Our target price is INR750.
Key risks are fuel price spikes and US dollar strength.
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