A Jet Airways (India) Ltd. aircraft takes off at Mumbai Airport (Photographer:Santosh Verma/Bloomberg News)  

Edelweiss Sees Jet Airways Flying High Despite Recent Earnings Letdown

India’s Jet Airways Ltd. is poised for a take-off, according to Edelweiss Capital, which is betting on lower operational costs ahead. The domestic broking firm sees a potential upside of nearly 20 percent from Friday’s close despite the carrier posting a disappointing set of September quarter earnings.

Fresh strategic measures by the company’s newly appointed chief executive officer and cuts in non-fuel cost per available seat kilometers are expected to rationalise elevated costs, according to the Edelweiss’ report. Jet Airways promises to reduce its debt of Rs 7,800 crore from its cash accruals.

While the company is targeting a cut of around 12 to 15 percent in in-fuel CASK, the company is also adopting a series of measures strengthening its business domestically and internationally, the report added.

Edelweiss upgraded Jet to ‘Buy’ from ‘Hold’ and raised the target price to Rs 822.

Jet Airways is expanding its domestic capacity by adding 12 new fuel-efficient 737 MAX’s from the next fiscal. Internationally, it's partnership with Air France-KLM guarantees more routes.

The second quarter’s results this financial year faced pressure from the international business, sending down the operation income by 8 percent year-on-year. Even the yield, said Edelweiss, was flat at Rs 4.5 per kilometre, compared to Indigo's nine percent jump and Spice Jet's five percent jump.