The airline reported a net standalone loss of Rs 1,297 crore in the July-September quarter on the back of higher fuel costs and foreign currency losses
NEW DELHI: Jet Airways, which posted losses for the third straight quarter, has decided to cut flights on less profitable routes and add capacity to more lucrative markets in a bid to boost revenues as it struggles to stay afloat.
The airline reported a net standalone loss of Rs 1,297 crore in July-September quarter on higher fuel costs and foreign currency losses, according to it's exchange filing.
Jet Airways’ losses for the first six months of 2018-19 now stand at Rs 2,620 crore. That's nearly equivalent to its current market capitalisation of Rs 2,750 crore.
In a statement, the airline, which is part-owned by Etihad Airways, said: “The airline has embarked on a comprehensive review... The measures will include rationalisation of operations on select, uneconomic routes.”
It added that it will redeploy planes to more productive domestic and international sectors.
Sources in the airline said the review is expected to help deliver a more efficient and economically viable network, with a focus on profitability rather than market share.
“With our clearly defined focus on profitability, we are in the midst of turning the ship around,” Jet’s Chief Executive Officer, Vinay Dube, said in the statement.
The carrier has lost nearly 70% of its market value this year as its shares fell amid a cash crunch triggered by costlier fuel and its inability to pass on higher costs due to competitive fares in the world's fastest-growing aviation market. Its shares rose as much as 6.4% to Rs 257.80 today after declining 5.8% in opening trade.
The airline’s revenue was able to increase 10% over the year-ago period to Rs 6,161 crore on the back of passenger growth. But that came at the expense of yields as intense competition restricted its ability to raise fares to recover higher costs. Jet’s yield, which measures average earnings per passenger per kilometre, declined 6% to Rs 4.18.
Jet’s fuel cost per available seat kilometre rose 44% over the year-ago quarter to Rs 1.65. That's despite higher capacity deployed on international routes that enjoy the benefit of lower taxes on jet fuel.
Due to continued losses, Jet’s total liabilities rose 18% to Rs 22,671 crore. These include long- and short-term borrowings, trade payables, and other financial obligations.
Earlier this month, a media report said Tata Group was in talks to buy a majority stake in the airline and its frequent flyer programme, JetPrivilege. Jet said the report was speculative.
“We are confident that we will overcome our current challenges, honour our commitments to our stakeholders, and deliver a more strategic, efficient and financially viable airline,” Jet’s Dube said.
(With agency inputs)
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