what are the prospects of HOLDING JETAIRWAYS shares?

Answer 1

HOLD FOR 5 YEARS FOR A PRICE TARGET OF Rs.3000
IN SHORT TERM JET AIRWAYS SHARE LOOKS WEAK

Answer 2

Hold and be patient.

Answer 3

Sell You will loose money.

Answer 4

JET AIRWAYS (INDIA) LIMITED.

AGM held on 27 September, 2005

Performance

Performance highlights for the financial year ended March 31, 2005: Gross revenues were over Rs. 4,400 crore, 24% higher compared to the financial year 2003-04. Significantly, revenues crossed the $1 billion mark. Profit before tax was Rs. 582 crore, up 227%, and profit after tax Rs 392 crore, up 140%. The number of revenue passengers carried increased 17% to 8.14 million from 6.91 million in the previous financial year, while passenger load factors increased to 71.3% from 63.9% and cargo tonnage carried went up 14% to approximately 99,000 tonnes from 87,000.

Strategy

During the year under review, the company fully implemented a state-of-the-art Yield Management System, which enables the airline to implement a dynamic pricing policy, depending on the available capacity on each flight, with a view to neutralizing the effects of lower yields by maximizing revenues per flight. The company will continue to leverage this system to maintain market leadership.

The company will additionally enhance market leadership and reduce costs through greater use of the on-line booking system, which was introduced in April 2004. The results of a recent promotion the company had launched to expand on-line sales have been encouraging, with the number of bookings on its booking website doubling within a few days.

The final component of the company's strategy to maintain leadership in the domestic market is to induct additional capacity on key domestic routes. The Boeing 737 Next Generation aircraft will remain the mainstay of the company's domestic operations. The company has ordered 10 new such aircraft scheduled for delivery between March 2006 and October 2007. The company will additionally lease three Boeing 737 Next Generation aircraft to support domestic operations.

The company has one of the most comprehensive networks in India. It has commenced operations to Kathmandu in fiscal 2005, following flights to Colombo in March 2004. More recently, the company has started flights to Singapore, Kuala Lumpur and Heathrow, London.

The key components of the strategy are:

· Excellence in customer service

· Convenient flight timings and connections

· Young and modern fleet for safety, reliability and lower operating costs

· Continued investment in staff training and development

· Relentless focus on cost discipline

· Highest standards of corporate governance

During 2004-05, the company maintained leadership in the domestic market with an estimated market share of 42.9%. During the year under review, there were two major initiatives as part of its commitment to passenger delight and service excellence.

First, the company's loyalty program - Jet Privilege - was completely revamped to give members more enhanced and flexible opportunities to earn mileage with the frequency of travel as well as through increased tie-ups with other international airlines, international hotel chains and other reputed service providers. The company's re-launched program won recognition at the prestigious Freddie Awards, held in April 2005, where the company competed against loyalty programs of airlines worldwide. Today, the company has a loya membership base of over 500,000.

Second, the company successfully implemented a program throughout the organization called - Seamless Customer Care - to make each employee fully aware of his or her role in achieving excellence in every area of service delivery to the customer.

Enthusiastically implemented by young quality champions who report to senior management, the program has reinforced the company's commitment to quality. The program was constantly analysed with customer feedback.

Major awards

In recognition of high service standards, the company received three major awards during the year under review:

The "Most Respected Company Award" in the travel and hospitality sector by Businessworld magazine in October 2004

The "Best Domestic Airline" by the readers of Travel Trade Gazette (TTG)-Asia and TTG China in October 2004

The Galileo-Express Travel and Tourism Award for "India's Best Domestic Airline" in November 2004.

The company won these awards for the second year running.

The company`s special "Visit India" fares which provide time-restricted unlimited travel to inbound tourists have proved to be very popular. In order to cater to growing tourist numbers to the state of Rajasthan, for instance, the company has enhanced capacity to the state by operating larger Boeing 737 aircraft instead of the smaller ATR aircraft and operated additional flights to Jodhpur. For domestic travellers, the company's `Jet Escapes` holiday packages to a variety of destinations within India have been very well received. The company's role in promoting tourism will now be considerably enhanced with the commencement of international operations.

The company`s technical service reliability was maintained at over 99%. This compares with the best in the world and is a measure of its emphasis on on-time performance and attention to safety. Its safety record remains among the best in the industry worldwide.

Opportunities

The future opportunities for the company lie in capturing a share of the growing market for domestic travel in India and a meaningful portion of the international traffic into and out of the country. There were over 18 million international passengers in the year ended March 31, 2005, a market which grew by 20% over the previous year and is expected to grow at similar rates over the coming 3-5 years. Today, three out of every four international passengers into and out of India fly on non-Indian carriers. International passenger growth is being driven by more tourism, improved economic growth and resulting business travel, by increased consumer demand for holidays and visits overseas and finally by greater affordability. By capturing a meaningful portion of this traffic, the company expects to be able to generate significant benefits for shareholders.

Challenges:

The problems faced by airlines around the world, set against a backdrop of rising fuel prices, underscore the challenging nature of the industry. As fuel prices have climbed, the inverse relationship between fuel prices and airline stock prices has once again been demonstrated. More than two-thirds of an airline's operating expenditure such as fuel, landing & navigation charges, lease charges and maintenance costs are not dependent on the business model.

Additionally, unlike in the U.S. or Europe, there are no secondary airports in India. Therefore, the opportunities to offer significantly lower fares on a sustained basis and still operate profitably, is limited. Various estimates suggest that the break-even load factors for some of the new entrants in the domestic aviation sector could be in excess of 85%. This high figure is a result of their unsustainably low fares, which bear little resemblance to actual costs that they are incurring, as well as to their salary levels in order for them to be able to successfully draw trained and experienced staff away from the incumbent airlines.

The company also believes that the long term health of India's aviation sector depends on a number of factors, including the continuing upgradation of airport infrastructure the availability of trained manpower in sufficient numbers so that airlines can grow together and better serve the fast-growing passenger base and the ability of domestic airlines to ensure a disciplined control on costs.

The company is seeing the greater incidence of delays in flight schedules, resulting from more congestion in the air at the major metros as well as the underdeveloped infrastructure on the ground. However, the company feels that the airport infrastructure available at the domestic terminal in Mumbai is sufficient and it is also satisfied with the progress on the modernization of the international terminals in Mumbai and New Delhi. It hopes that there will be projects similar to those undertaken in Bangalore and Hyderabad in other airports of the country.

The aviation sector as a whole is experiencing a shortage of trained and skilled manpower, as a consequence of which there is unhealthy competition for employees within India. The company feels that this is driving wages to unsustainable levels. As a possible solution, it is supporting the development of training schools across the country and sourcing available pilots and engineers from outside the Indian market. It feels the entire airline industry should adopt this strategy. In order to retain employees and better align their interests with those of shareholders, the company expects to shortly implement an employee stock ownership program.

The company is in favour of airlines hedging their fuel requirements so that they can control costs involved in this major head of expense. Fuel today accounts for over a third of an airline's operating costs. This will go a long way toward ensuring rational pricing and healthy financial profits in the long term for all airlines.

In the Pipeline:

With regard to proposed operations to the U.S., the company has already been designated by the Government of India and the company's operating permit has been endorsed. In response to the baseless allegations that have been made against the company in the U.S. and the subsequent queries raised by the U.S. Department of Transportation to the US Embassy in New Delhi, the Ministry of Civil Aviation has already submitted its favourable recommendation, which is being processed by the Ministry of External Affairs as per standard procedure. The company has completed all the remaining formalities for for the U.S. Department of Transportation's approval. As per advice received from U.S. legal counsel, the company expects to receive the approval shortly.

In the meantime, in order to maximise the utilisation and minimise the financial burden of the 3 A-340 widebodied aircraft that the company leased for the U.K. and proposed U.S operations, the company entered into short-term sub-leaseing contracts initially with Air India and more recently with Gulf Air. The company will also be launching a second service to Heathrow from New Delhi at the end of October, which will allow the company to further enhance utilisation of the A-340 fleet.

Road Ahead:

International operations form a significant part of the company's future plans. With the continued robust growth of international air travel out of and into India, the company is well placed to seize the opportunities pursuant to private sector domestic carriers being permitted to fly beyond domestic borders. To meet the needs of the company's future international growth, orders have been placed for 10 Airbus-330 aircraft - of the 200 and 300 type - to meet the needs for Asian, African and European destinations and for 10 Boeing-777 aircraft for longer haul destinations including the U.K. and the U.S. The company will additionally lease 2 new Airbus-330 aircraft for international operations. The company is currently evaluating financing opportunities in relation to the expansion of the fleet. The company intends to follow a conservative dividend policy that allows it to retain and re-invest a substantial portion of its cash flow into growing its core operations.