Aims at debt recast; rejig balance sheet; expansion to Americas, Europe, SE Asia
Allaying fears from new competition, Jet Airways promoter Naresh Goyal has said that the airline would turn profitable by 2017 through a major rejig in its balance sheet, cost reduction, fleet and route expansion in close association with the Gulf carrier Etihad Airways which has picked up 24 per cent stake in the former.
“We are in the process of finalising our new products, restructuring our financial balance sheet, working with banks and making payments to our creditors, “ said Goyal in a first joint meet along with Etihad President and CEO James Hogan. He said that Jet's Airways plans progressive expansion to North and South Americas, Europe and Africa and aims at lowering of operational costs due to combining of their fleet and routes of the two airlines. Jet Airways has incurred a loss of Rs 4,130 crore for 2013-14.
“We plan to reduce losses in 2015, consolidate in 2016 and turn profitable in 2017.... We are already on track as our international business has turned profitable. We now have to take our business forward,” said Jet's CEO designate Cramer Ball. Ball is yet to get necessary clearances to formally take over his position.
Terming the Indian aviation market as 'fiercely competitive', Ball said, the next 12 months would see major changes being implemented to enhance Jet's domestic and international operations.Replying to queries on whether there was any restructuring of Jet fleet or whether its ATR turboprop fleet be transferred to its low-cost subsidiary Jetlite, he said, “We are looking at it. We may sell our surplus aircraft or return them to lessors. We finding out what is the most economical way to go forward. We will be announcing all this soon.”
Asked whether Etihad would consider increasing its equity stake in Jet from the current 24 per cent, Hogan said, “We have just completed the process (acquiring equity). We are delighted with our investment....We have stepped in as a partner.”Referring to the strategic direction of the Jet-Etihad partnership, the Etihad chief indicated taking on competition from global groupings like Star Alliance, which recently had Air India as its latest member, though he did not name any.
Etihad's equity investments in Virgin Australia, airberlin, Air Seychelles, Aer lingus, Air Serbia and Jet and similar talks going on with Alitalia would make the combine to have a total fleet of over 700 aircraft touching all major destinations across the globe, he said.
“If we complete our talks with Alitalia (to acquire equity), we will be the fifth largest airline group in the world,” Hogan said.He said Etihad had made $750 million investment in Jet, including $380 million in equity and $70 million to buy three Jet slots at london's Heathrow Airport.“We are long-term investors in Jet Airways, which is different from being a shareholder. We have no exit strategy from Jet and we are here to stay,” Hogan said.
Jet CEO Ball said the 312 destinations being served by the two airlines now would grow to 1,200 by 2018 as “connecting traffic from Abu Dhabi will increase seven-fold in five years”. Goyal and Ball said Jet would launch flights to Ho Chi Minh City in Vietnam from November and add Kuala lumpur, Yangon and Seychelles within the current financial year.
Focus areas for Jet's global operations would include newservices to Europe, China, Australia and Southeast Asia, expanded frequencies to existing routes and additional codeshares, the Jet chief said.In addition, the domestic business model would improve connectivity across India and worldwide, while removing complexity in product and fleet, including the standardisation and reconfiguration of the Boeing 737 fleet. Goyal also announced the appointment of aviation veteran Subodh Karnik as the Chief Operating Officer pending regulatory approval.