- POSTED: 28 May 2014 02:09
India's Jet Airways announced its biggest quarterly loss and vowed "stringent" cost-cutting steps as it struggles to become profitable in the fiercely competitive airline market.
NEW DELHI: India's Jet Airways, partly owned by Gulf carrier Etihad, announced on Tuesday its biggest quarterly loss and vowed "stringent" cost-cutting steps as it struggles to become profitable in the fiercely competitive airline market.
The country's second-largest airline by market share reported its net loss jumped to 21.54 billion rupees (US$366 million) for the financial fourth quarter ended March 31 from 4.96 billion rupees in the same period last year amid soaring costs.
The publicly traded airline's net loss for the year soared to 41.3 billion rupees from the 7.8 billion loss it posted the previous year.
"We need to take stringent measures to ensure our success in this challenging and competitive aviation industry. There can be no short-term solutions," said Jet chairman Naresh Goyal.
The company named its fourth chief executive since last June and said it would reconfigure planes and write down overvalued assets as part of efforts to return to profitability.
"Our first priority on the journey to profitability will be to establish a more solid financial foundation," Goyal, a former travel agent who set up the carrier, said.
The board has "approved details of a three-year business plan to reshape the airline and return it to profitability," Jet said.
It did not specify details of the measures but said it planned a "major restructuring", network and fleet changes and "significant product enhancements".
The company, which in April 2013 sold a 24 per cent stake to Etihad for US$379 million, is set to see rivalry intensify in the already crowded Indian market.
The investment by the fast-growing Abu Dhabi-based carrier is intended to give Etihad a bigger foothold in the Indian market and compete with regional rivals which transport a large slice of Indian passenger traffic to the Gulf and beyond.
Etihad's purchase of a minority stake in Jet came after the government relaxed foreign ownership rules to allow overseas carriers to buy up to 48 per cent of local airlines.
Etihad said in a statement it was a "long-term strategic investor" in Jet Airways and "committed to supporting" the airline, one of half a dozen key players in the market.
All of India's airlines have been reporting losses apart from market leader IndiGo.
Malaysia's AirAsia, Asia's biggest budget airline, will start flying in the domestic aviation sector in a joint venture with India's Tata group.
The Tata group has also set up a joint venture with Singapore Airlines which will initially be a domestic airline and eventually fly internationally.
Two new airlines are set to start operations within months.
Jet said aviation veteran, Cramer Ball, 46, a former chief executive of Air Seychelles, who has also worked in top positions at Etihad and Gulf Air, would be its new head.
Ball is also a certified accountant, Jet said.
Airline earnings have been hit by expensive fuel prices and slower passenger growth as India faces its deepest economic slowdown in a decade.
Jet said costs leapt by 29 per cent during the quarter from a year earlier while it took a one-off seven-billion-rupee charge on its low-cost carrier Jetlite.