Struggling under high expenses and adverse operating conditions, Jet Airways has posted its highest-ever annual loss of Rs 4,129 crore -- forcing it to adopt tough measures to lower costs and achieve profitability with a three-year business plan.
The decisions -- which included appointment of a new CEO, cleaning up of balance sheet, pruning of overvalued assets, cost restructuring and changes in service and fleet plans -- were taken at a board meeting attended for the first time by representatives of Abu Dhabi-based Etihad Airways, which has acquired a 24 per cent strategic stake in Naresh Goyal-led Indian carrier.
The carrier, to be headed by Australian national Cramer Ball (formerly with Etihad) as its new CEO going forward, posted a net loss of Rs2,153 crore for the quarter ended March 31, 2014, while its consolidated loss for the full fiscal widened to Rs4,129 crore.
It is the fifth straight quarterly loss for the airline.
These are the biggest ever losses suffered by Jet Airways, which had last reported a full-year profit in fiscal 2010-11, when it posted a meagre profit of Rs9.69 crore on stand alone basis, although it was in losses on consolidated basis at that time also.
Its fourth-quarter loss in 2012-13 stood at Rs495 crore, while its consolidated full-year loss in that fiscal was Rs779 crore.
For 2013-14 fiscal, Jet reported operating loss of Rs2,076.2 crore and a non-cash extraordinary write down of Rs936 crore, aircraft-on-ground of Rs417.6 crore, and impairment of goodwill of Rs700 crore.
Jet Chairman Naresh Goyal said, “We need to take stringent measures to ensure our success in this challenging and competitive aviation industry. There can be no short-term solutions. The changes required will take time to implement.
“Our first priority on the journey to profitability will be to establish a more solid financial foundation for this airline.”
Jet said it has also set up a task force to implement a major business restructuring exercise following “an extensive cost benchmarking study by independent advisors”.
The company said that “tough decisions (have been) taken to clean up balance sheet and lay foundations for healthy financial future”, while steps are being taken for new network and fleet plans along with “significant product enhancements”.
The board also “approved details of a three-year business plan to reshape the airline and return it to profitability,” Jet said in a statement, but did not specify the details of planned cost cutting measures.
“In one of its first steps, the board and management team worked to clean up the balance sheet, which includes writing down overvalued non-cash assets,” it said.
On stand-alone basis, Jet Airways’ total income in FY’14 increased to Rs17,713.47 crore from Rs17,403.17 crore in FY’13.
The quarterly total income grew nearly 10 per cent to Rs4,678.17 crore during the January-March 2014 period. The net loss on stand-alone basis widened to Rs3,667.85 crore from Rs485 crore in FY’13.
The company also announced the appointment of its new CEO, aviation specialist Cramer Ball, after its earlier chief quit in January. About the new CEO Ball, Jet said he comes with “extensive experience at the highest levels of international, domestic and regional aviation sectors.”