The crisis-hit Jet Airways had earlier deferred announcement of June quarter results. Its shares crashed to a 3- year low and it came under the regulatory lens for a number of corporate governance lapses. The aviation regulator, DGCA, too has started safety audit of the airline. There also has been talks of a possible pay cut for the employees.
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Jet Airways continues to battle such big financial problems. In between such a crisis, the Jet Airways Staff and Officers’ Association has sought a meeting with the CEO Vinay Dube to have a comprehensive understanding of the factors. Dube had failed to meet earlier after assuring an appointment on August 10. It wants clarity from the management on the issues that have led to the current situation. The association has stated that its members have not been able to get their due from the management all these 25 years while the company has wasted huge amounts of money on expats’ induction, unnecessary expenses, and inefficient operations.
The said employees’ union of Jet Airways does not include pilots, engineers and cabin crews and claims to have around 10,000 members. It has complained that the management was wasting financial resources on “inefficient” operations and hiring of foreign pilots.
Jet Airways had to do the necessary regulatory filing. Its Board finally met on 28th August 2018 and announced the June quarter results. It tried to explore various cost-reduction ways with a viable turnaround plan.
The company reported that it has incurred a loss of Rs 1,323 crore and has negative net worth as of June 30. It had posted a profit of Rs 53.50 crore in the year ago period.
Total income of the company, however, rose to Rs 6,010 crore from Rs 5,648 crore in the year ago quarter.
The company, as is the norm, blamed macroeconomic factors for its poor performance. It mentioned the increase in brent fuel price along with a weak rupee causes the low fares unable to match the rise in ATF prices. It has undertaken various steps to improve operational efficiency. The company said it is continuing its thrust in relation to save costs, raise funds, optimize revenue management opportunities including monetisation of assets and increasing ancillary revenues. These moves are are attempts to maintain a regular cash flow. Thus, Jet Airways hopes that its ability to repay the borrowings, and its overall performance will improve considerably with these initiatives.
Jet Airways’ Board came up with a few firm decisions for its strategies to counter the present crisis. They are:
1. Comprehensive cost reduction programme
2. Induction of cost and fuel-efficient B737 MAX aircraft
3. Revenue enhancement programme
4. Product and service improvements
5. Leveraging the well-established 8.5m member JetPrivilege programme
6. Balance sheet restructuring
7. Fleet simplification
The two main proposals considered are — infusion of capital and the monetisation of the airline stake in its Loyalty programme.
As per Naresh Goyal, Chairman Jet Airways, this augurs very well for the financial situation and sustainability of the Company’s sustainability in the long term.