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India’s largest full-service carrier Jet Airways said on Wednesday that it is restructuring its loss-making domestic operations with a view to achieving profitability by 2016-17 and will shortly announce a “new product” towards this end. The carrier is also in talks with bankers to restructure its rupee-denominated debts by raising lower-cost $150 million dollar debt.
“We are in the process of finalising our new product. We will announce it soon. We are looking to restructure our balance sheet for which we are working with bankers and creditors. We are also looking to consolidate our fleet,” Jet chairman Naresh Goyal said at the first press conference jointly organised by Jet and Abu Dhabi’s Etihad after the latter picked up a 24% stake for over R2,000 crore last year in Jet.
Added Jet CEO-designate Cramer Ball, “Its been tough over recent years, but we have a commitment to re-establish Jet as India’s leading airline. We plan to reduce losses in 2015, consolidate in 2016 and turn profitable in 2017. We are already on track as our international business has turned profitable — it will be 63% of our revenues by 2016 from 45% today. We now have to take our business forward through higher load factors and reducing unit cost by 17%”.
Ball, incidentally, was the CEO of Air Seychelles, an airline in which Etihad has a 40% stake. Jet has also appointed Subodh Karnik, a former consultant as its COO-designate subject to government clearances.
Ball said that the focus will be to “remove complexity” in the domestic operation, adding that multiple brands is a challenge. Other company officials hinted that Jet’s current domestic strategy of operating both a full-service and low-cost brand (Jet Konnect) may be revisited because it leads to confusion about the brand message to customers. “We need to adapt, need structural change over next 12 months because the market is fiercely competitive,” Ball said.
As part of the turnaround Jet will extend code share agreements with Etihad and its seven strategic airline partners (eight if a stake purchase with Alitalia is completed). More international routes will be connected to Abu Dhabi, starting with Goa, Pune, Ahmedabad and Lucknow by end-2014, while internally the airline will look to improve efficiencies by merging reservation systems used by Jet Konnect and the parent brand.
Etihad CEO James Hogan said that Etihad and its partners will be the fifth largest airline group in the world if the Alitalia