The deal with Oman Air may fetch the airlines an income of nearly a million dollar per month per aircraft.
A wet lease is a leasing arrangement whereby one airline (lessor) provides an aircraft, complete crew, maintenance, and insurance to another airline (lessee), and gets paid on per hour basis multiplied by the number of hours that aircraft is flown by the lessee airline.
The move comes as the airline seeks to reduce costs and mop up additional revenues amid cash drought. Jet Airways has reported a whopping Rs 1,323 crore of net losses for the June quarter due to higher fuel cost, falling rupee and low fares.
"Wet lease works brilliantly for Jet under current circumstances of financial strain the airline is going through as the aircraft it’s leasing out are the owned assets or on financial leases," Mark D Martin, founder and CEO at Martin Consulting, an aviation advisory and consultancy firm told the paper.
Jet has leased its long-range aircraft type, the Boeing777-300ER, to Turkish Airlines. The airline is also in an advanced stage of discussions with TruJet to sublease up to seven of its ATR planes to the regional carrier. TruJet, which started operations in July 2015, has an all ATR fleet.
The deal with Oman Air may fetch the airlines an income of nearly a million dollar per month per aircraft, Martin said.
"For roughly a 240 hour of flying on a month usually an ACMI for an A330 type will be between $4,000 to $5,000 per hour, which will be around $9,60,000 per month that Jet will get for its every aircraft as the cash operating cost is paid by the airline that is leasing it. Similarly, a 737 will fetch $2,800; so for 240 hours of flying it would roughly be $6,72,000 per month,” Martin told the paper.
Oman Air is currently in an expansion mode. An addition of widebody A330s and narrowbody Boeing-737 will help the airline to expand its capacity for the coming holiday traffic, industry experts told the paper.
The move is in line with the airline's plan to monetise loyalty programme JetPrivilege and wet-lease some of its small aircraft to mobilise urgent working capital, as announced by the airline while declaring their earnings in August. The board had also approved the management plan to wet- lease some of its ATRs, which were deployed on short-haul routes.
Amit Agarwal, deputy CEO and CFO at Jet Airways, had earlier hinted at the high market value of the Boeing 777s and the Airbus A330s.
“Even on a conservative basis the value of these aircraft would not be roughly less than $750 million to $800 million and the debt outstanding is about Rs 1,900 crore or nearly $280 million. So, clearly there is a large equity sitting there. Yes. These aircraft are pledged in favour of the engine-backed and ECA backed banks. And obviously since considering that kind of equity sitting in these aircraft we have clearly identified on our balance sheet that these are the assets held-for-sale. So, we have a clear intent of doing a portion of this fleet on a sale-leaseback,” Agarwal had said.A Jet Airways spokesperson, in response to a query sent by the paper, said that the "information, based on hearsay and speculation, is absolutely baseless and incorrect”.