NEW DELHI: Jet Airways Ltd laid out a three-year restructuring plan yesterday vowing to take tough measures to return India’s No. 2 airline by market share to profit after posting its worst ever loss.
All but one of India’s big airlines loses money, with high costs, low fares and heavy competition which is likely to increase with two new carriers set to enter the market this year.
Kingfisher Airlines, once the No.2 player, grounded its fleet in 2012 for want of cash.
Jet Airways, which has not reported an annual profit since 2007, reported its biggest-ever consolidated annual loss of Rs41.3bn ($700m) for the year to March.
For the quarter, its standalone net loss was Rs21.54bn, its worst-ever, and its fifth straight quarter in the red. “These numbers should serve as a wake-up call,” said Kapil Kaul, Chief Executive for South Asia at aviation consultancy Centre for Asia Pacific Aviation.
“The turnaround is going to take longer than expected and my assessment is it will be painful.”
Shares in Jet closed 8.7 percent lower in their biggest single-day drop in a year.
Jet expects its operations to stabilise and return to profit by around the middle of the fiscal year which ends in March 2017, said Ravichandran Narayan, vice-president of finance.
The airline plans to bolster revenue through code-share arrangements and ancillary services such as fees charged for seat selection and upgrades.
It is looking to cut costs and boost efficiency in every operating unit, Raj Sivakumar, senior vice president of alliances and planning, said on the call.
Jet will reconfigure its Boeing 737 fleet and will add seats in wide-body Boeing 777 planes, it said. It is also looking to sell three Airbus A330 planes that are currently leased out.
The carrier is cleaning up its balance sheet and writing down some “overvalued” assets, it said.
Reuters
