The company is planning to raise 400 million Dollars

India's largest airline has been going through a tough phase in the recent past. A five-day strike by a section of its pilots in September is estimated to have left an Rs 100 crore hole in its revenues.

While the airline has been able to resolve the dispute and recover quickly, the strike and subsequent cancellations not only caused revenue loss, but also disgruntled customers which could impact it in the short term.

In order to arrest a fall in market share, ensure higher loads and lower cost, the company has been expanding the services of its no frills all-economy class offering, Jet Konnect.

From a third, the company is expected to deploy two-thirds of domestic fleet on Jet Konnect from October this year. Ever since the launch of Jet Konnect in May 2009, domestic load factors have improved to 70 per cent from 64.9 per cent in April.

Overall, in the domestic operations, from losses at the operating profit level in June quarter of last year, cost cutting, reduction in aviation fuel costs and higher loads have helped boost operating profit margins to about 9 per cent in June 2009 quarter. On a consolidated basis, these stood at 16.5 per cent for June 2009 quarter against losses in the same quarter last year.

The company is planning to raise $400 million (about Rs 2,000 crore) from an equity issue of which half will be used to retire a part of the Rs 15,000 crore debt (Rs 3,500 crore short-term debt), while the rest will be used for working capital requirements.

A reversal of industry fortunes should help Jet improve its financial and operational parameters. The stock is trading at 18 times its 2010-11 estimated earnings and should fetch about 20 per cent over a one year period from these levels, if the macro factors don't turn adverse.