Jet Airways Q4 FY17 Results Conference Call

Jet Airways Q4 FY17 Results Conference Call MANAGEMENT: MR. AMIT AGARWAL ACTING CHIEF EXECUTIVE OFFICER, AND CHIEF FINANCIAL OFFICER MR. GAURANG SHETTY WHOLE-TIME DIRECTOR MR. JAYARAJ SHANMUGAM- CHIEF COMMERCIAL OFFICER MR. N. RAVICHANDRAN VICE PRESIDENT, FINANCE MODERATOR: MR. SANTOSH HIREDESAI SBICAP SECURITIES Page 1 of 18

Ladies and Gentlemen, Good day and Welcome to the Jet Airways Q4 FY17 Results Conference Call, hosted by SBICAP Securities. As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing '*' and then '0' on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Santosh Hiredesai from SBICAP Securities. Thank you and over to you, sir. Santosh Hiredesai: Thank you, Rio. A very good evening to all the participants. And thank you for joining the 4Q FY17 Business Call of Jet Airways. Today, with us we have the Senior Management of Jet Airways, represented by Mr. Amit Agarwal Acting CEO & CFO, Mr. Gaurang Shetty Whole Time Director, Mr. Jayaraj Shanmugam Chief Commercial Officer Mr. N. Ravichandran VP (Finance). So, we start off with opening remarks from the Management, followed by a Q&A session. Over to you, sir. N. Ravichandran: Thank you, Santosh. A very good evening to all of you. My name is Ravichandran. Before we start today's Earnings Call, let me state that certain statements made during this call related to our future business, financial performance and future events or developments may be construed as forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Let me now hand it over to our Acting CEO & CFO Mr. Amit Agarwal. Thank you, Ravi. A very good evening to all of you. I am pleased to extend a very warm welcome to this Earnings Call organized by SBICAP. I am extremely grateful to all of you for your time and interest that you have shown in our company. It is indeed a pleasure to be here with my team. I am accompanied by Mr. Gaurang Shetty Whole Time Director, Jayaraj Chief Commercial Officer and Ravichandran VP, Finance. I would like to commence with the full year FY17 Results, including the fourth quarter of this fiscal. We have reported a net profit of Rs. 438 crores for full year fiscal 2017 at a consolidated level, which makes it the second profitable year in a row. With this we have also reported the eighth profitable quarter in a row with net profit of Rs. 23 crores at the consolidated level. The consolidated EBITDAR for the full year fiscal 2017 was Rs. 4,425 crores compared to Rs. 5,341 crores in fiscal 2016. The EBITDAR in Q4 fiscal 2017 was Rs. 1,031 crores compared to an EBITDAR of Rs. 1,639 crores in the same period last year. During fourth quarter of 2017, the ASKs (Available Seat Kilometer) increased by 8% to 13.65 billion ASKs due to increased wide-body deployment. We have recorded a strong traffic Page 2 of 18

growth with number of passengers carried increasing by 5.4% to over 7 million in fourth quarter over same period last year. Total RASK during the quarter reduced to 4.20 from 4.38 in fiscal fourth quarter 2016, a drop of 4.1%. Yields during the same period also reduced by 3.6%. Total cost per ASK increased to 4.40 in the quarter vis-à-vis 4.16 in fourth quarter fiscal 2016. The fuel CASK increased in the fourth quarter this year as Brent crude prices increased from $35.08 a barrel in fourth quarter fiscal 2016 by 58.6% to $55.48 per barrel in fourth quarter fiscal 2017. However, on the other hand, CASK excluding fuel continues to reduce with a non-fuel CASK in fourth quarter fiscal 2017 reducing by 5% to 3.15 against 3.32 in fourth quarter fiscal last year. As stated above, our profits during the year and fourth quarter fiscal 2017 were adversely impacted by the rising fuel prices, which is evident in the total fuel cost for the company increasing from Rs. 1,071 crores in fourth quarter last year to Rs. 1,700 crores in this quarter fiscal 2017, an increase of 58.6%. In fiscal 2017, the company has concluded settlements with various employee groups, including pilots and engineering staff. As we have earlier mentioned that these settlements were pending for few years and have resulted in certain one-time expense payments like payment of arrears. There was also increase in retirement benefit liabilities due to increase in base salary, coupled with decreasing G-Sec rate. And as we have increased the additional deployment of aircraft, we have increased the number of employees who are directly linked to the scale of operations such as pilots, cabin crew, and certain airport staff. These factors have impacted negatively to our profitability for the current year. The company has continued to focus on reducing debt despite challenging situation in the market place. The company has been able to reduce its net debt by Rs. 468 crores during the quarter, and overall for the fiscal 2017 the company has reduced its net debt by Rs. 1,900 crores. During the quarter we have focused on deploying the B777 which returned to us in later half of calendar year 2016.Subsequent to various routes which we upgraded in last year, we have identified market for redeployment of these wide-body aircraft to increase utilization of the same. We have also done certain network upgrades and expansion has been identified for winter 2017, including the upgrade to Mumbai-Paris route on 777 from current A330. Additionally, we have launched two new routes, which are Chennai-Paris and Bangalore-Amsterdam from winter 2017. And we are also adding a third frequency from Mumbai to London. Efficiencies in inventory management, coupled with efforts on market segmentation, including focus on corporate and other high yielding traffic have led to a slight improvement in domestic yields. Domestic average fares improved marginally by 2.2% in fourth quarter fiscal 2107 vis- Page 3 of 18

à-vis fourth quarter fiscal 2016, despite significant growth in market capacity, largely inducted by competition. Continuing weakness in international market has led to lower demand impacting its average fares lower by 9.1% in fourth quarter fiscal 2017 vis-à-vis fourth quarter fiscal 2016. Overall, there was a decline in average fare by 1.6% for the group in fourth quarter FY17 versus same period last year. The weakness in the international market is primarily attributed to Gulf as we continue to see a full effect of economic slowdown in that market. As we spoke in our previous calls, the economic slowdown of GCC countries resulted in significant weakening of demand and resulted in excess capacity, both in passenger and cargo. Despite aggressive sale effort and marketing initiative, the average fares in gulf were lower by 15% in fourth quarter fiscal 2017 vis-à-vis fourth quarter fiscal 2016. We continue to closely monitor the economic environment in the GCC market and take necessary actions required. Jet Airways and our partner Etihad Airways have signed a ground-breaking agreement with the Government of Maharashtra to promote tourism to the western Indian state. Jet Airways was named India's Best Airlines at TripAdvisor's Travelers' Choice Awards 2017 and featured amongst the top 200 most influential brands in the world. Jet Privilege, which is our Frequent Flyer Program, created history at the 10 th addition of the Distinguished Customer Loyalty and Customer Experience Awards by winning a record number of six accolades at the highly coveted industry awards. The program won laurels in the following categories: Loyalty Program of the Year, Best Loyalty Program in the Service Sector, Best use of Innovation in Loyalty Marketing, Best Use of Promotional Shopper Marketing Campaign, Best use of Customer and Data Analytics in Loyalty Program and Best Use of Technology to Enhance Customer Experience. Let me now ask Ravi to take you through some of the financials and operating results. N. Ravichandran: Thanks, Amit. Let me start with Jet Group's consolidated performance, to start with comparison of the quarter four of fiscal 2017 versus same period fiscal 2016. In Q4 FY17, while the total capacity in terms of seats grew by 3.2% for both domestic plus international operations put together. Total passengers carried by the airline grew by 5.4% versus Q4 FY16. Compared to same period last year, in Q4 FY17 we carried 4.9 million passengers in the domestic market, recording an increase of 2.5%. At the same time in the international market the airline flew 2.09 million passengers, recording a growth of 13.1%. Overall, we achieved a seat factor of 83% in the quarter. Page 4 of 18

The improvement in the numbers of passengers carried resulted in an increase in our consolidated gross revenue by 3.5% to Rs. 5,728 crores in the current quarter from Rs. 5,533 crores in the same quarter last year. As stated earlier, while yields in domestic market have shown slight improvement, international markets continue to be under severe pressure. Domestic RASK, revenue per available seat kilometers improved by 4.8% whereas on international front the RASK dropped by 10.1% in Q4 FY17 versus Q4 FY16. The total RASK reduced by 4.1% from Rs. 4.38 in Q4 FY16 to Rs. 4.2 in the current quarter. Our total cost per ASKM increased to Rs. 4.4 in Q4 FY17 versus Rs. 4.16 in the same quarter last year. This was primarily attributable to increase in fuel cost by 58.6%. CASK excluding fuel, on the other hand reduced by 5% from Rs. 3.32 in Q4 FY16 to Rs. 3.15 in the second quarter. As mentioned in our footnote number 3C to the public results, during the quarter the Company accrued a profit of Rs. 154.6 crores as per the provisions of the development agreement that was entered into with Godrej Buildcon Pvt. Ltd. It was net of carrying value of the lease land amounting to Rs. 393.5 crores, adjusted against advance receipt from the developer amounting to Rs. 365 crores on completion of development of the plot of land situated in Bandra Kurla Complex in Mumbai. Continuing on the operational highlights for Jet Airways standalone results, domestic plus international. Passenger carried increase from 6.04 million in Q4 of FY16 to 6.34 million in Q4 FY17, recording an increase of 4.9%. ASKMs went up by 8% as compared to Q4 of last year. Gross revenue increased by 3.1% to Rs. 5,449 crores in the current quarter from Rs. 5,286 crores in the same quarter last year. Reported profit after tax was Rs. 37 crores for Q4 FY17. Jet Airways domestic operations. The share of our total domestic revenues to total revenues was 47% in the quarter. Total domestic revenues were Rs. 2,701 crores, up by 7% as compared to Q4 of last year. The passenger revenue from domestic operations increased by 4.8% to Rs. 2,323 crores in the current quarter. RASK in domestic market improved by 4.8% in the current quarter as compared to Q4 FY16. ASKM went up by 2.2% compared to Q4 of last year. Domestic load factors were at 84.2%, recording an increase of 2.9 percentage points compared to Q4 FY16. Now, moving to international. The share of international revenues to total revenues was at 53% for the quarter. Our passenger revenue from international operations increased by 2.9% to Rs. 2,560 crores in the current quarter. ASKMs increased by 11.9% compared to Q4 of last year. RASK in the international market reduced by 10.1% in the current quarter as compared to Q4 of FY16. Overall, seat factors in the international market was at 82.2%. Moving on to our 100% subsidiary, JetLite operational highlights of JetLite. JetLite recorded a loss of Rs. 17.1 crores in the fourth quarter of FY17 as compared to a profit of Rs. 32.6 Page 5 of 18

crores same period last year. For the full year FY17 JetLite recorded a net loss of Rs. 57.8 crores compared to net loss of Rs. 20.7 crores in FY16. ASKMs increased by 7.7% compared to Q4 of last year. Seat factor improved from 80% in Q4 FY16 to 83.1% in Q4 FY17. Total revenue increased by 12.8% to Rs. 301 crores. Comparing Jet Group's consolidated performance between FY17 and FY16. ASKMs went up by 6.7% as compared to same period last year. Passengers carried increase from 25.84 million in FY16 to 27.15 million in FY17, recording an increase of 5.1%, at a total seat factor of 81.3%. Overall, CASK decreased by 0.2% from Rs. 4.34 in FY16 to Rs. 4.33 in FY17. While CASK, excluding fuel, reduced from Rs. 3.26 in FY16 to Rs. 3.22 in FY17. EBITDA for the year was at Rs. 4,425 crores in FY17 as compared to Rs. 5,341 crores in FY16. Reported profit after tax was Rs. 438 crores for FY17. Let me now take you through the details of the debt and liquidity position for the Jet Group as a whole. As on 31 st March, 2017, our debt on balance sheet stood at Rs. 9,035 crores, or equivalent to US$1.4 billion. The debt balance as on 31 st March, 2016, was at Rs. 10,813 crores. Our total debt comprises of aircraft debt of Rs. 2,809 crores, equivalent to US$433 million, and over 73% of our total debt is denominated in US dollars. Repayments during the period: During the current quarter our net debt reduced by Rs. 468 crores, taking total reduction in debt by Rs. 1,902 crores during the year ended 31 st March, 2017. Our net debt as on 31 st March, 2017, stood at Rs. 8,062 crores as compared to Rs. 8,529 crores as of 31 st December, 2016, and Rs. 9,964 crores as on 31 st March, 2016. Thank you, Ravi. Let me take you through how do we look at the current quarter and the outlook: The weakness in the market conditions continue and the overall aviation environment continues to be extremely challenging. Because of the increased capacity, both in the domestic and international market, the increase in fuel prices are not being fully passed on to the customer. In view of this, our focus remains upon improving efficiency, reducing cost and improving the utilization of the aircraft. We have strengthened our connectivity towards the Far East, forging successful Codeshare with Hong Kong Airlines, CG Airways, Jet Star Airways, bringing high demand estimations including CG, Bali, Okinawa in Japan as well as Darwin and Auckland in Australia and New Zealand respectively. The growing network of our 22 Codeshare enabled Jet Airways to offer significantly enhanced globally connectivity, delivering increase in passenger traffic in the coming period. Codeshare traffic with strategy partner Etihad Airways over Abu Dhabi gateway and other partner airlines now generate over 1800 passenger per day. Page 6 of 18

Some of the key enhancements to our domestic and international connectivity from summer 2017 include seven new non-stop routes in domestic market, including Mumbai-Bagdogra, Mumbai-Madurai, Chandigarh-Jaipur, Bangalore-Kozhikode, Delhi-Nagpur, Kolkata- Lucknow, and Dehradun-Srinagar. Four new one-stop flights including Mumbai-Srinagar, Mumbai- Aizawl, Bangalore-Lucknow and Delhi- Silchar have been introduced. Three additional frequencies on existing route from Mumbai and seven from Delhi have been introduced. Ladies and Gentlemen, let me now open the call to the questions. Thank you very much. We will now begin with the question-and-answer session. We have the first question from the line of Praveen Shah from Edelweiss. Please go ahead. Praveen Shah: Sir, first question is, as you had mentioned that ex-fuel CASK has improved, so would you please give the details where the saving has come from? So, basically what happens is on our ex-fuel CASK it is the various task forces, as I had mentioned in earlier calls as well, that we have created various cost reduction task forces and it is not coming just from one line item, it comes possibly in every area as we continue to focus and see the efficiency coming from the various task forces, be it in maintenance cost, be it in the productivity of our people as well as all the discretionary spending. Praveen Shah: So, is there any contribution from the currency movements? Not much in the currency movement, as the average for last year was 65.6 and this year it is 67, so that is why not much of a movement and benefit coming out of currency movement. Praveen Shah: Secondly sir, can you give the RASK for domestic and international for the year FY17? N. Ravichandran: Sure. The RASK for the current year FY17 stood at Rs. 4.95 as compared to 5.03 same time last year, this is for domestic operations. Praveen Shah: And international? N. Ravichandran: The current year stood at Rs. 3.83 as compared to Rs. 4.11 last year. Praveen Shah: And on the international, you said an improvement in the average fares after fourth quarter are we seeing or we are still at, like you had mentioned, 15% fare discount in the Gulf, that is still going on or? So, effectively if you look at it, the pressure in the market continues at this juncture. However, on a specific number in the market we would not be able to give any guidance. Praveen Shah: No, in general sir? Page 7 of 18

In general the pressure continues on the market place. Thank you. We have the next question from the line of Vishal Rampuria from HDFC Securities. Please go ahead. Vishal Rampuria: Sir, can you give me the CASK between domestic and non-domestic? Vishal, what happens is considering the network and the fleet which we operate, it is very difficult to seggregate between a domestic and international, because there are certain costs which have distribution on both the side, and that is why we are giving the CASK for the business and not separately for domestic and international. Vishal Rampuria: Fair point. And how much would be the difference in the fuel cost per ASKM? So, again it depends on different markets and depends also on the stage length which varies and the wide-body and the narrow-body which you have different type of aircraft. So it is not a like-to-like comparable because you have in domestic, operations between ATR and 737s and on international you have the 737, 330 and 777. So they have absolutely different consumption levels, and therefore it is not appropriate to make that comparison. Vishal Rampuria: And one more question to ask you, sir your selling cost, basically if I look at your cost item, computerized reservation cost around Rs. 1,000 crores in FY16. Can you give more insight why the cost item is so much on higher side? So, we have a platform which is known as global distribution system, GDS system which makes sure that we have the inventory display both for our domestic as well as our international fleet across the globe, which across the globe the travel agents have an access on our systems and flights to book the tickets. And that is why we are participating in to the GDS network which enables bookings, and considering we have an extensive Codeshare partnership with various airlines, it is imperative that we have such a GDS system in place. Vishal Rampuria: Sir, this cost for GDS, is it based on per ticket or it is based on, how the cost is basically kind of driven? So, it is dependent on per ticket and we have also in the selling and distribution cost, our cost of frequent flyer program which is the JPPL as well. Vishal Rampuria: Sir, in case you benchmark your GDS calls compared to other global players, so where do you stand in terms of cost structure in GDS? See, all the global airlines participate in a GDS program where they have the inventory, as a network carrier you need to display your inventory so that there is a product access to the agents. Page 8 of 18

Vishal Rampuria: Sir, I understand your point that you have to be part of your GDS so that you can improve your overall efficiency and your load factor. But what I am trying to understand is that in terms of your cost efficiency where do you stand in terms of your GDS cost compared to global players like Etihad or Jet or Singapore Airlines, any other player who are of similar size or similar operations? So, first of all, everyone has a very specific contract depending upon their market situation, the number of passengers which they fly and so on. So, it is not a true comparison but we have got one of the best competitive rates as we have understood when we went through a benchmarking exercise. Vishal Rampuria: And sir one more question to ask you, in case you allow me. Sir, your repair cost for the quarter went up by 50%, aircraft maintenance cost. N. Ravichandran: Yes, Vishal we have explained this earlier too, in view of the component accounting that we have followed, there is an impact on the maintenance cost, it has an impact. And in addition to that there were certain events during the year and in view of that there is a slight marginal increase on the expense line item. Vishal Rampuria: Okay, but into the component accounting I always think that the expensive item will be more stable, right, because you have to amortize entire cost structure over a period of the life of the aircraft? N. Ravichandran: No, the impact of it being the first time when we were in the transition, when you see that is an impact of it. And also the impact of the rupee-dollar also, because these are dollar denominated cost, it also has an impact on it. Thank you. We have the next question from the line of Ashish Shah from IDFC Securities. Please go ahead. Ashish Shah: Just a question on the aircraft debt, you mentioned the number, I might have missed it. N. Ravichandran: The aircraft debt is Rs. 2,809 crores equivalent to US$433 million. Ashish Shah: So, out of the total debt of Rs. 9,000 crores odd, we have Rs. 2,800 crores as the aircraft debt and the remaining would be in the nature of short-term debt or working capital debt? N. Ravichandran: These are blend of short-term and long-term, for general corporate purposes. Ashish Shah: Fine. Also, continuing with the same, what would be the debt due for the next 12 months out of Rs. 9,035 crores of debt? N. Ravichandran: Around $200 million. Page 9 of 18

Ashish Shah: Also, I wanted to ask that I think we had raised some NCDs at a very high coupon, about 20.6%. So, any plan to refinance them or these will continue? N. Ravichandran: No, we plan to, as Amit mentioned earlier, our focus has been to reduce our dependence on debt. We are planning to repay it at the end of the third year which will be in September 2018. Ashish Shah: And do we expect that we could be able to repay the entire $200 million debt due this year from internal accruals or you would need to borrow in some other form? Obviously, our endeavor is clearly to generate cash from the business and repay that. As you have seen in the last two years we have paid close to Rs. 3,000 crores of debt generating out of cash flow from operations. So, clearly our endeavor is to work on this in order to make such repayments. Ashish Shah: Sure. Just last thing, what be your fleet addition target for FY18? As we have earlier mentioned, our new fleet of Max starts to come from June 2018 onwards. In this year what we plan to do is take almost anything between six to eight aircrafts from the open lease market and add into our fleet, which is primarily the 737s. And we have already added one aircraft into the fleet. Thank you. We have the next question from the line of Anand Krishnan from Kotak Infina. Please go ahead. Anand Krishnan: Sir, there were some newspaper articles which were actually suggesting that KLM is looking out to buy a stake in Jet Airways. So, I mean, there were also suggestions that they were exploring some flight and cargo tie-up with Jet. So, what actually happens to the first right of refusal what Etihad actually has and what is the idea behind the same? Okay. First of all, let me tell you, I cannot speculate on the rumors which float in the newspaper and in the media, number one. Number two, when you talk about we have an extensive Codeshare arrangement with the KLM, Air France and Delta, this enables us to have any Codeshare like Etihad to participate and grow the traffic between one airline to other airlines. In this process, obviously, cargo is also a part of the structure which we want to take the advantage, as you know Amsterdam is a major cargo market and by deploying 777s on this market we tend to take the full advantage. Now, as far as the third point which you mentioned, about right of first refusal, we have no such clause of right of refusal, I will not like to comment any other thing on this, I do not know from which source you have got this piece of information. Thank you. We have the next question from the line of Sanjay Doshi from Reliance Mutual Funds. Please go ahead. Page 10 of 18

Sanjay Doshi: Sir, I have a couple of questions. The first one is on income from leasing of aircraft, the fourth quarter number stands at around Rs. 64 crores, where do you see this, I mean should we take this as a continuing run rate for next year? Sir, basically if you look at it, now currently we have got one aircraft which is leased to Air Serbia, so that I think the lease-rental if I remember right, we are talking of approximately Rs. 5.5 crores per quarter. Sanjay Doshi: And what is the response to the wide bodies that you have deployed, as you were earlier indicating in Europe as well as for Singapore route? Absolutely. I think what we have seen is a greater outcome. If you see, when we moved the gateway from Brussels to Amsterdam, we had been deploying A330. And with the increased traffic flow, and as I mentioned earlier on other question, because of the AF-KLM-DL Codeshare and partnership, we see very clearly stronger loads and that is why we have upgraded it to 777. And as I mentioned, that we see Amsterdam as clearly a big gateway as we introduce these flights, both 777s and from Delhi-Amsterdam and Mumbai-Amsterdam and introducing additional flight from Bangalore to Amsterdam in the winter session. So, clearly we see a very good deployment and the loads coming through with these widebody deployment. Sanjay Doshi: Sir, just one last thing I wanted to get your sense about our ATR business, are we going to get out of that business, can you share any thoughts on it? I mean, what is happening is there are lot of speculations in the market place, we continue to evaluate our fleet and network and the whole philosophy of our aircraft and we have a multiple fleet which enables us to participate into different market and being a network carrier supports our overall network strategy. Sanjay Doshi: So we continue with our current Yes, at this juncture we continue. Thank you. Our next question is from the line of Anshuman Dev from ICICI Securities. Please go ahead. Anshuman Dev: Sir, over the last couple of quarters we have seen that in-spite of very high pressure in the international segment we have done fairly well in the domestic segment. And despite demonetization and despite increased capacity, our shares in domestic segment have performed very well. I wanted to understand that what has been some of the measures that we have taken in the domestic segment and can we replicate some of them in the international segment as well? Page 11 of 18

Okay. So, basically what has happened is on the domestic segment and international segment we have put our route controllers who effectively have done a phenomenal job on doing an inventory control management. However, in the international segment, if I look at different markets, we were quite well positioned into the Gulf market and today the whole capacity deployment in the Gulf market as well as the traffic flow, the capacity has been consistently increasing and the traffic flow because of the weaker oil economy has dropped dramatically, so you are seeing lesser and lesser traffic coming from the Gulf market. And these are our all Indian people who work in the Gulf market have reduced or cut their travel, and that is the weakness which we have seen into the Gulf market. Anshuman Dev: And one more thing which I wanted to understand was this 1.5 billion that we received from the transaction with Godrej Buildcon. So, now our other long-term liabilities have decreased sharply in FY17, so I presume this is because of the value that we got from the Godrej, and that is the kind of money left which we can get from Godrej? Yes, precisely that is the reason for the steep drop in the other long-term liabilities between the two periods that you have seen, which is mentioned in our notes as you see, the profit that we have recorded is net of the adjustments that we have, the money of Rs. 365 crores that was earlier appearing. What we are likely to get over, because there is a smaller portion of inventory which is in the process of being sold, so we can expect anything between another additional Rs. 50 crores to Rs. 75 crores in the next period. Anshuman Dev: And sir, one more accounting related query that I had. Some of the restatements that we have done for the past quarters has been mostly between other incomes and operating income, I think some of the other income has gone down and some operating income has gone up. I just wanted to understand what has been the spends? N. Ravichandran: So, the various other ancillary services that we provide, the security handling, the third party engineering certification, they have all moved up which earlier was being recorded as other income. So these are the primary changes which we have done. Anshuman Dev: Okay. In light of this thing I also wanted to understand you have incorporated a subsidiary for ground handling and allied services, and one of your competitors has done the same. So, is there a tax related benefit or how does it fit into the broader scheme of the things? So, basically what has happened is this subsidiary which we have created is for ground handling. As per the new Civil Aviation Policy that enables us as an airline to operate your own subsidiary into ground handling activity, which was not the case earlier. And we have incorporated the company and we are currently evaluating the prospects of it to do the ground handling job under that company which is being of our subsidiary. And there are no tax incentives or such things. Anshuman Dev: Okay that is really helpful, sir. And would you be able to share the amount of fuel we use in FY17? As in the volume in the sense, the fuel consumed, do we share that kind of a data? Page 12 of 18

I can give that data but it would not really help because we have different fleet types. Thank you. Our next question is from the line of Joseph George from IIFL. Please go ahead. Joseph George: My first question is in relation to the outlook that you shared where you mentioned that you expect the weakness in market conditions to continue because of higher capacity. Now, what I wanted to understand was, was this comment specifically in relation to international or does this comment also cover your view on the domestic business? So, basically what happens is, as I mentioned clearly that we have 50-50 approximate share between the domestic and international market. And clearly the international market continues to see the weakness in the trend. But some weakness we have also seen, not in the number of passengers or the traffic growth, however in terms of the yield we have seen certain aberrations coming into the domestic market, as you know we enter into a weaker season starting July- August. Joseph George: So there is some bit of weakness in domestic as well, alright. The second question that I had was in relation to the surplus that you are recognizing in your P&L from transfer of Jet Privilege program. So, if I am not mistaken, the number for the quarter was around Rs. 75 crores and you have mentioned that you are carrying forward an amount of Rs. 304 crores for appropriation in the upcoming years or quarters. Now, what I wanted to understand was, would I be right in assuming that this entire Rs. 304 crores would be accounted for income in FY18 or do you think it is going to be staggered over 2018 and 2019, that is part one of the question. Second part was, do you expect more accretion to the Rs. 304 crores number or is it that once this entire Rs. 304 crores is appropriated into the P&L over the upcoming period, then there would not be any further credits? Right. As we have mentioned earlier, there were certain conditionality's linked to this transfer of program that we did way back in 2014. But in-line with the conditions as they are being complied progressively, we have been accruing this profit over the year. So, this Rs. 305 crores, or rather Rs. 304.49 crores which is being carried forward is likely to be consumed in fiscal 2018, the entire amount of it. And there will be no further addition, because this is the total surplus arising on transferring this program on a slump sale basis and there will be no further addition to this. Joseph George: Got it, sir. Sir, one housekeeping question if I may. In the standalone business what is the domestic passenger revenue that you gave for the quarter, I think I missed that, in the standalone business domestic passenger revenue? Total revenues was at Rs. 2,701 crores for the group in this quarter.. Thank you. Our next question is from the line of Binay Singh from Morgan Stanley. Please go ahead. Page 13 of 18

Binay Singh: Two questions, firstly, could you share some thoughts on GST from service tax to ATF being outside, how does it impact shares for you or any impact on the operating leases or so post GST? Well, as you would have known, ATF has been kept outside the purview of GST for the moment, this involves a large change, probably a legislative change to bring this within the ambit of GST. Talking about the other inputs, the most important of it being the operating lease, yes they have been subjected to GST as we move forward. However, they are entitled to credit and the airline can claim credits for these. But it remains to be seen between the economy class and business class where we are seeking clarification from the government as to how this would pan out, based on the initial inputs they are very confusion. So we have sought certain details. And overall, as I have said, we will be able to take the credits for all the GST on inputs that we would be paying. Binay Singh: Okay. So, overall you think the 1% service tax cut off that you are getting, should be sufficient enough, there will not be any fare hike or fare drop, all is equal post GST? Yes, more or less it is likely to be flat. Binay Singh: And sir secondly, something that you also alluded to, we have seen some bit of moderation in demand in domestic side, from 25% or so to around 15% for the last two months, is that because of fare going up, or is it that the industry after a very good run is now slightly normalizing? No, so basically what is happening is that it is also the seasonality. And obviously, when you start having a 20% plus growth for two years, so you have moved up the level from where you are growing, and that is also impacting to some extent the growth in the number of percentage in domestic traffic. Binay Singh: Okay. So it is basically normalization. And lastly, any comments on regional connectivity scheme, how are you guys looking at it? As you know, in the first round we have had not bid for the regional connectivity very clearly. And in the second round we will continue to evaluate, as I mentioned, ATR as an aircraft we have that kind of aircraft, we will continue to evaluate whether it makes sense for us. Especially we are a network carrier so I have to see how that benefit into my network, and we are engaging with the government as well. Thank you. We have the next question from the line of Aditiya Biyani from Reliance Mutual Fund. Please go ahead. There seems to be no response from the line of Mr. Aditya Biyani. We move to the next question. The next question is from the line of Suraj Chheda from UBS Securities. Please go ahead. Page 14 of 18

Suraj Chheda: Sir, just wanted to understand, one, in terms of how many A330s are we flying on domestic routes right now? So, basically what is happening is that we fly our A330s on various metro sectors, so effectively you cannot say that I have got one deployed or two deployed, because as you know our philosophy and the theme of the company has been to have higher utilization of the aircraft. So when these aircrafts fly out internationally and for the next second flight you have the time available, you deploy them into a domestic sector. So, effectively, it is not appropriate to see that one or two flights, however we fly in almost six to seven routes in the domestic market, especially the Mumbai-Chennai, Mumbai-Bangalore, Delhi-Chennai, Delhi-Bangalore and Bombay-Delhi. So these are the broad routes we fly on the wide bodies. And we see a very good response from our customer from a passenger point of view. Suraj Chheda: Okay, so they are flying a combination of international plus domestic? Yes, it is not a dedicated fleet for a domestic market. Suraj Chheda: Right, because that is what I wanted to understand, given if you really fly this domestic and the profitability given that we were like really short routes relatively would be lower or how do you see the profitability of flying such aircrafts on domestic routes versus really a long haul? These aircrafts are meant for a long haul and if you are able to utilize the aircraft, it is always better because when the aircraft is flying it earns money, when it is sitting on the ground it does not earn money. Suraj Chheda: And in that context also, given that the GST rates on business class will be higher and I think the configuration of these aircrafts will be such that you will have more business class. I mean, can you really fill the business class into that extent, I mean again the profitability really speaking. We are operating these aircrafts on the metro to metro sector, as I mentioned Bombay-Delhi, Bombay-Bangalore, Delhi-Bangalore, this has been traditionally a very good demand for a business class and we are able to get these aircrafts filled very comfortably. And the schedules have been organized or we have planned the network accordingly. So I do not see any significant challenge on filling these business class seats on to these sectors. Thank you. We have Mr. Aditiya Biyani from Reliance Mutual Fund back in the queue. Please go ahead. Aditiya Biyani: Sir, I just wanted to get a sense on the employee cost expenses, so as stated earlier in your opening remarks saying that some of them were for the retirement benefits and one-time settlement. I just wanted to understand how much it was for the one-time settlement, if you could quantify. And going forward, would this be the incremental employee cost as a base and how do you see that going forward? If you could answer that please. Page 15 of 18

Sure. So, basically in fiscal 2017 we had approximately close to Rs. 145 crores to Rs. 150 crores of one-time cost contribution coming primarily on account of the retiral benefit, especially the gratuity benefits. And the second portion was, as I mentioned that there were certain wage settlements reached against which the provisions were made in the previous year, some of the arear payments had been done also in that year. So, to that extent Rs. 150 crores you can consider as one-time payment. Aditiya Biyani: And sir going forward do you expect this Rs. 2,900 crores of employee expenses to be the base and from your incrementally there will be growth or do you see some productivity coming in on account of the increase in employee expenses? Yes, if you look at it, as we continue to grow, as I mentioned earlier that we are going to take seven to eight aircrafts and those eight aircrafts will be deployed. So to that extent, we are considering a productivity enhancement, but at the same time we have to also consider some of the adjustments which have to be done on account of inflation which we are carefully watching and doing it. Those things have to be considered in order to make sure that our employee cost remains appropriate. Aditiya Biyani: Sir, my second question is on the seat factor, in the previous con-calls you used to mention about the load factor route wise, so is it possible to get the seat factors on Gulf route and say on European Getaways. You see, we have mentioned but what happens is some of the seat factors which you talk about is largely dependent upon the capacity which you deploy. And for the whole year fiscal 2017, to give you a prospective, UK obviously continues to be a very, very strong market with 85% - 87% plus market, in terms of the Gulf around the 80% level, the Amsterdam, again north of 87%. So, effectively we see a very strong lead in international market, especially in the London market, Amsterdam market and that is why we continue to upgrade our aircraft from 330 to a 777 that is clearly reflected. And the domestic market clearly, we have improved our load factors as well in-line with the market. Aditiya Biyani: So I just wanted to understand, incrementally also on the ASK side from the international side, are we looking at reducing the capacity increase on the Gulf side, because I believe the Gulf RASK has come down significantly, so impacting our international yield. So just wanted to get a sense of the deployment on the European side or is the European as affected as the Gulf ones? You know what happens is, first of all let me clarify that the aircraft which flies into the Gulf is 737 aircraft which operates in to the domestic as well as into the gulf market. So, I have always a possibility to continue and evaluate depending on the seasonality, right balance between a domestic and international market, especially into the Gulf. So we continue to do that and we seek out the routes which we are again helping the overall network. And second thing, those aircrafts which we are deploying or upgrading, clearly enables us to do the right seat factor Page 16 of 18

into the international markets like Paris or as I mentioned to you that we are going to upgrade it to 777 to the Paris flight from Mumbai-Paris. So that what you call the procedure or policy is continuously reviewed and adopted. Aditiya Biyani: Sir, just one fundamental factor that, the other airlines which compete with you, for example Emirates, they have a connection for example from Bombay, Dubai and outside to various locations, and you also have Bombay, Abu Dhabi and outwards. Since you are operating your aircraft or Etihad is operating, they have the full length, complete length in their control, the first phase of Bombay-Dubai as well as Dubai-overseas. Whereas, you have the Codeshare or the arrangement with Etihad. So, why are you not effectively able to compete let's say on the final route to Europe, I mean where is the real gap coming in the two offerings? Gaurang Shetty: So, I think that is a little apples-to-oranges in comparison, we have a very comprehensive Codeshare relationship with Etihad, but at the same time the same way that other airlines have flocked in their home markets and our home after Bombay and Delhi. So, we connect traffic over Bombay and over Delhi, and then also have fleet connectivity with our partners in Abu Dhabi. So, our competition, we operate to Amsterdam, we operate to Paris, we operate to London and we connect traffic over our hubs into these markets. Basically what happens is, the whole purpose of a Codeshare is, it is as seamless, you may be sitting into a different flag carrier or a different carrier, but you will see as if your bags are being transferred, you are getting your miles, everything is as seamless as you could be that you are operating your flight or you are operating with your Codeshare partner. So, let's say the whole premise of this business partnership or a Codeshare business is that we operate in to 46 cities into India, so there are about 46 cities and with partnership with Etihad brings me to Abu Dhabi, Abu Dhabi takes the traffic forward into cities into Europe and America. Similarly, if I stretch the argument and take it to Europe to our Air France, KLM and Delta, whereby we bring the traffic into Amsterdam and Paris and London and thereby thereafter the traffic goes to at least 10 to 11 cities into the US and more than I think 40 cities into Europe. So this enables a seamless and that is why there is a huge value of Codeshare which Jet has been successfully implementing over the last so many years. Aditiya Biyani: Sir, my only thing was that, in that case actually you should have a very significant advantage because you are first catering to these 46 cities, a customer who is in let's say Jodhpur, he flies to Delhi and he takes a Jet Aircraft, goes to Abu Dhabi and then flies to some city in Europe. So this is a very, very big advantage. Now, the only question is, Gulf weakness which you are saying, is it between cities in India to Gulf location only or is it percolating all the way to the final destination, is there a weakness in let's say Bombay-Dubai or Bombay-Frankfurt thing, is it only up to Dubai or up to Abu Dhabi where you are facing this weakness or is it the final destination as well? So, what is happening is that when I talk about Gulf traffic, you know there are large number of Indians living into Gulf. The biggest traffic which is being generated out of India is into the Page 17 of 18

Gulf market. And with all due respect, this is a traffic in terms of various labor traffic, drivers, and this kind of a traffic which is a point to point traffic. Let's say somebody from a Kochi is travelling into Jeddah, somebody travelling from Chennai into Riyadh, somebody Bahrain. So, this kind of a traffic because of the weakness in the oil economies in GCC, that traffic has reduced. So we are not referring to the traffic of the connecting traffic into Europe or Americas that profit continues. As I mentioned just now that I am running 85% - 87% plus load factor on those flight, so that is not an issue. The issue is coming primarily on account of the traffic between India and Gulf point to point. Aditiya Biyani: And sir, is there flexibility for you to change the number of flight or deploy the aircraft in some other location where your traffic conditions are superior or demand conditions are superior, how flexible is that? No, it is a possibility clearly and we do it, as I mentioned earlier, the 737 we shift around between domestic and Gulf markets. Thank you very much. Due to time constraint, we will take that as the last question. I would now like to hand the conference back to the management for any closing comments. Thank you very much. And we look forward to talking to you in the next quarter as well. Thank you very much SBICAP as well for hosting. Thank you very much. That concludes this conference. Thank you for joining us, Ladies and Gentlemen. You may now disconnect your lines. Page 18 of 18