BUSINESS
The carrier had posted a net profit of Rs 71 crore during the corresponding period last fiscal
Naresh Goyal-promoted Jet Airways on Monday reported a consolidated net loss of Rs 1,261 crore for the second quarter (Q2) ended September 30, 2018. The carrier had posted a net profit of Rs 71 crore during the corresponding period last fiscal.
The airline's current liabilities exceed its current assets. The management blamed the rising aircraft fuel cost that increased over 50%, depreciating rupee, a challenging airfare pricing situation in a domestic market with over capacity among the prime reasons for the continued losses. The company had declared Rs 1,323 crore of loss during the previous quarter.
A back of the envelope calculation shows that Jet Airways has been losing around Rs 14 core every day. In comparison, the debt-ridden national carrier Air India's per day losses were at less than Rs 10 crore last year.
Concerned over the severe losses, Jet Airways, which is working on a turnaround strategy, is believed to be in talks with a few private equity firms and corporates including Tata Sons for fund infusion.
The point of contention, according to reports, has been a controlling stake of 51% that Tata Group is demanding while Goyal is said to be opposing it. Mumbai-based Tata Group, which already runs two airlines in India – the full-service carrier (FCC) Vistara and low-cost carrier (LCC) AirAsia – wants to merge Jet Airways with the former.
Additionally, Jet Airways's management said it plans to save around Rs 2,000 crore over the next couple of years by the way of sub-leasing some of its fleet, renegotiation of contracts, better utilisation of resources, etc. Cost saving of over Rs 500 crore has already been realised to date (in H1FY19), the airline said in a statement.
Analysts say that while the industry is in adding capacity despite the massive losses, Jet Airways has consciously begun to reduce it. Airlines increased domestic capacity by 18% during Q2 of this financial year (FY), but Jet Airways reduced it by 4%. Similarly, while the industry capacity grew 14% (Q2FY18), 14% (Q3FY18), 18% (Q4FY18), 18% (Q1FY19), Jet Airways recorded an increase of just 6.7%, 6.7%, 6.6%, 6.8%, respectively.
According to industry observers, Jet Airways has been facing headwinds for the past few quarters. The deciding point came in August after the top management of the airline told its employees that it will not be able to survive beyond 60 days if cost rationalisation measures were not taken. Though the airline denied the reports, it accepted that cost-cutting measures were on.
The carrier has also been losing market share. The latest figures available with regulatory body Directorate General of Civil Aviation (DGCA) reveal that the airline's share has been reduced to 15.4% in the domestic market from 15.6% at the beginning of the year.
Jet Airways's poor performance comes on the heels of market leader IndiGo posting a Q2 loss of Rs 652 crore last month, its first since getting listed in November 2015. In comparison, IndiGo had earned a profit of Rs 551.6 crore in the year-ago period.
LCC SpiceJet will be releasing its results later this week. The Ajay Singh-promoted airline had reported a Rs 38 crore loss in the last quarter.
A Mumbai-based analyst said the situation is bad for the entire industry and not just a few airlines. "However, very few airlines like IndiGo have the deep pockets to fight the headwinds," the analyst added.
Rs 1,261 crore – Losses in second quarter ended September 30
4% – Capacity cut undertaken by Jet Airways in Q2
DNA TV Show: Ahead of Maharashtra poll results, MVA, Mahayuti engage in resort politics
Maharashtra: Stage set for assembly poll results; Mahayuti, MVA confident of their victories
All set for vote counting in Jharkhand tomorrow; NDA, JMM-led alliances confident of winning
Watch: Australia star inquires Rishabh Pant about his next IPL team, gets 2-word reply
Shah Rukh Khan’s house Mannat was first offered to his industry rival…, but he refused because...
The Visionary Who Promises a Blue Sky for India: Holger Thorsten Schubart’s G20 Climate Speech
The Surge of High-End Living: Luxury Residential Market to Outpace Other Segments
FeFCon 2024 to be Held in Bangalore: A Premier Event on Fever Management
'That’s wild': Noida man turns cigarette butts into teddy bears in viral video, watch
London Airport evacuates passengers over security threat, thousands stranded
The World’s First Innovative Iron Supplement to Combat Iron Deficiency and Anaemia
Meet grandmother who became fashion icon after trying on her granddaughter’s clothes
IND vs AUS: Rishabh Pant joins Virat Kohli, Rohit Sharma in elite WTC list, becomes 3rd Indian to...
'All scripted drama...': Puneet Superstar allegedly assaulted by influencers in viral video, watch
Actress Ana de Armas caught kissing Cuban President Miguel Díaz-Canel’s son in viral photos
Oreshnik's Shadow: Will Russia's hypersonic missile force west to back down?
‘You’re So Beautiful’: World’s tallest woman meets world’s shortest woman over tea, pics go viral
Delhi-NCR Air Pollution: Consequences of GRAP-4 are drastic, may have adverse effects, says SC
Delhi-NCR Air Pollution: Schools likely to stay closed till..., check city-wise update
Maharashtra: 3 killed, 9 hospitalised after gas leak at fertiliser plant in Sangli
THIS farm is selling a cup of coffee for Rs 28000, but there's a twist, it is...
Chhattisgarh: 10 Maoists killed after encounter with security personnel in Sukma
Mukesh Ambani's SUPERHIT plan for Jio users, offers unlimited 5G access for 1 year for just Rs...
IND vs AUS 1st Test: KL Rahul's dismissal sparks DRS controversy in Perth Test
Dense fog, heavy rain predicted in these states till November 25; check here
Oreshnik Hypersonic Missile: Which nations are within its range?
Bihar teacher, principal reach school in drunken state; know what happened next
'I have faced a lot of...': Arjun Kapoor REVEALS his biggest fear amid break up with Malaika Arora
How millions of Indians may get affected due to US indictment of Gautam Adani in bribery case
Amid divorce rumours with Aishwarya Rai, Abhishek Bachchan says 'missing someone is okay but...'
After Bibles, watches and sneakers, Donald Trump is now selling autographed guitars, price is...
Delhi pollution: Air quality improves to ‘very poor’ category, AQI at...
Vladimir Putin's BIG threat, warns he could strike UK with new ballistic missile if...
Shillong Teer Results TODAY November 22, 2024 Live Updates: Check winning numbers here
Somebody misbehaved with Alia Bhatt on Highway sets then Imtiaz Ali had to...
Zomato CEO Deepinder Goyal reveals twist behind Rs 200000 job fee, closes application window
Days after Ratan Tata's demise, Tata Group's Rs 131000 crore company inks pact with ADB for...