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Jet Airways reports third consecutive quarterly loss of Rs 1,261 crore on higher fuel, steep rupee

Another crippling factor was the forex loss, which jumped more than six-times to Rs 416.69 crore from Rs 72.99 crore in the year-ago period.

twitter-logo PTI   New Delhi     Last Updated: November 12, 2018  | 22:07 IST
Jet Airways reports third consecutive quarterly loss of Rs 1,261 crore on higher fuel, steep rupee

Jet Airways on Monday reported its third consecutive quarterly losses for the quarter ending September, with a consolidated net loss of Rs 1,261 crore, roiled by higher fuel cost that soared 59 percent, and a steep rupee fall that led to a sevenfold spike in forex losses. The Naresh Goyal-run airline, which is part-owned by Gulf carrier Etihad Airways, had posted a net profit of Rs 71 crore in the same period last fiscal, it said in a statement. The cash-strapped airline, which is reportedly looking for investors tide over the liquidity crisis, said its fuel bill jumped 58.6 percent to Rs 2,419.76 crore during the quarter. In the year-ago period, it had spent Rs 1,525.66 crore in fuel cost.

Another crippling factor was the forex loss, which jumped more than six-times to Rs 416.69 crore from Rs 72.99 crore in the year-ago period. But, the management sounded confident of surviving the crisis, underlining the massive cost-saving plans underway. "With our clearly defined focus on profitability, we are in the midst of turning the ship around and are closely engaged with all our partners to navigate the challenges posed by the current industry environment," chief executive Vinay Dube was quoted as saying in the statement.

Rating agency Crisil had recently projected that domestic airlines would report a combined loss of over Rs 7,348 crore (at pre-tax level) due to higher fuel cost and steep fall in the rupee this fiscal. The numbers reflect the growing headwinds in the world's fastest growing aviation market in terms of net passenger additions, where the most profitable airline till last year--Indigo--too had reported a whopping Rs 652.13 crore of net losses in the September quarter compared to a profit of Rs 551.56 crore a year ago.

For the largest airline that controls over 43 percent of the passenger volume, this was the first-ever loss since it became a publicly traded company in November 2015. The other listed airline, Spicejet is also unlikely to report good numbers given the spike in fuel costs and the industry's inability to pass on the same to passengers given the cut-throat competition.

The Gurugram-based no-frills airline had reported a net loss of Rs 38.06 crore in the June quarter as against a net profit of Rs 175.2 crore in the same period last year. On a standalone basis, Jet Airways, which has been facing severe cash paucity from the beginning of the year leading to delayed salaries and other payments, reported a net loss of Rs 1,297.46 crore against a profit of Rs 49.63 crore in the year-ago period.

The airline said it continues to engage with its financial stakeholders for fund-raising and is actively working on its assets monetisation and capital infusion plans. Early last month, the airline, which had earlier this fiscal announced a Rs 2,000-crore cost-savings plans, had raised Rs 258 crore by selling advance discounted pre-paid tickets through Jet Privilege, its loyalty programme. The airline said, of the planned Rs 2,000-crore, it has already it saved Rs 500 crore so far this fiscal.

The company spent 56.6 percent more on fuel bills and a massive loss on account of foreign currency fluctuation of Rs 416.69 crore, which is over six times what it had suffered last year at Rs 72.99 crore in the year-ago period. Despite these headwinds, the airline registered a 7.3 percent growth in capacity or available seat kilometers (ASKMs) during the quarter while the revenue passenger kilometers (RPKMs) or passenger volume grew 10.5 percent, flying 7.45 million, which was 2.2 percent more than the comparable numbers in the year-ago period, the airline said.

Average load factor rose 250 bps to 84 percent during the quarter and ancillary revenues grew at a higher 9 percent. Dube said, at the strategic level, the airline remains committed and is on track to realise most of the outcomes that were outlined as part of the turnaround strategy announced last quarter, including cost savings in excess of Rs 2,000 crore over the next two years via strategic initiatives.

These measures, which have already resulted in a saving of Rs 500 crore in the first half of the fiscal, include sub-fleet simplification, reduction in sales and distribution cost along with maintenance cost, renegotiation of contracts with vendors, and a more productive resource deployment geared to enhance profit and revenue, Dube said.

He also said the airline has embarked on a comprehensive review and consolidation of its network involving routes and markets. The strategy includes concentration of capacity, enhancing frequency, density and hub connectivity. The measures will include rationalisation of operations on select, uneconomic routes and the redeployment of these assets to more productive and economically efficient international as well as domestic sectors, closely aligning capacity with the demand characteristics of specific markets, it said. "As a part of this network consolidation, the overall scale of operations (ASKMs) however, will continue at the same level as the airline currently operates," he said.

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