Shares of Jet Airways, in which Etihad Airways owns a 24 per cent stake, fell yesterday after the carrier posted a record quarterly loss and named its fourth chief executive in less than a year.
The shares dropped 8.7 per cent and have declined 15.9 per cent this year, compared with a 16 per cent gain in the benchmark S&P BSE Sensex index.
“There can be no short-term solutions,” the chairman, Naresh Goyal, said. “The changes required will take time to implement.”
Jet, which has had an annual profit only once in the past seven years, will soon also face intensified competition as local ventures of AirAsia and Singapore Airlines aim to start flights this year. All Indian airlines except the market leader IndiGo have been losing money.
The company expects to return to profitability by the middle of the financial year ending March 31, 2017, as it implements a turnaround plan that includes increasing ancillary revenue, selling unutilised planes and focusing on narrow-body aircraft, vice president of finance Ravichandran Narayan said on a conference call.
“It is a fact that we are a very highly leveraged company,” Mr Narayan said.”We continue to have a negative net worth situation.’’ Jet had consolidated debt of US$1.77 billion billion at the end of March, while its cash and cash equivalents were just above $200 million, he said.
The company’s net loss widened to 21.5 billion rupees (Dh1.34bn) in the quarter ended March from 4.96bn rupees, it said. That compared with the 1.57bn-rupee median loss of four analysts’ estimates compiled by Bloomberg. Costs for the period rose 29 per cent to 59.3bn rupees.
“The turnaround will take time and another round of equity infusion by Etihad, to 49 per cent, is likely in the near term,” said Kapil Kaul, the South Asia chief executive of the Capa Centre for Aviation in New Delhi. “Etihad needs to take the Jet turnaround more seriously than what is visible at present.”
The Etihad chief executive James Hogan and chief financial officer James Rigney attended Jet Airways’ board meeting on Tuesday for the first time, the airline said.
The company announced its latest steps after advisers Seabury APG completed a long-term network and fleet plan.
Jet Airways will reconfigure its Boeing 737 fleet and seek to increase the seat count in its widebody fleet, it said.
