Struggling under high expenses and adverse operating conditions, Jet Airways today posted its highest-ever annual loss of Rs 4,129 crore -- forcing it to adopt tough measures to lower costs and achieve profitability with a three-year business plan.
The decisions -- which included appointment of a new CEO, cleaning up of balance sheet, pruning of overvalued assets, cost restructuring and changes in service and fleet plans – were taken today at a board meeting attended for the first time by representatives of Abu Dhabi-based Etihad Airways, which has acquired a 24 per cent strategic stake in Naresh Goyal-led Indian carrier.
The carrier, to be headed by Australian national Cramer Ball (formerly with Etihad) as its new CEO going forward, posted a net loss of Rs 2,153 crore for the quarter ended March 31, 2014, while its consolidated loss for the full fiscal widened to Rs 4,129 crore.
It is the fifth straight quarterly loss for the airline.
These are the biggest ever losses suffered by Jet Airways, which had last reported a full-year profit in fiscal 2010-11, when it posted a meagre profit of Rs 9.69 crore on stand alone basis, although it was in losses on consolidated basis at that time also.
Its fourth-quarter loss in 2012-13 stood at Rs 495 crore, while its consolidated full-year loss in that fiscal was Rs 779 crore.
For 2013-14 fiscal, Jet Airways reported operating loss of Rs 2,076.2 crore and a non-cash extraordinary write down of Rs 936 crore, aircraft-on-ground of Rs 417.6 crore, and impairment of goodwill of Rs 700 crore.
Jet Chairman Naresh Goyal said, "We need to take stringent measures to ensure our success in this challenging and competitive aviation industry. There can be no short-term solutions. The changes required will take time to implement.
"Our first priority on the journey to profitability will be to establish a more solid financial foundation for this airline."
Jet said it has also set up a task force to implement a major business restructuring exercise following "an extensive cost benchmarking study by independent advisors".
The company said that "tough decisions (have been) taken to clean up balance sheet and lay foundations for healthy financial future", while steps are being taken for new network and fleet plans along with "significant product enhancements".
The board also "approved details of a three-year business plan to reshape the airline and return it to profitability," Jet