even as they spruce up their fleet, they point out.
Phone calls and messages sent to Jet Airways executives seeking comments for this story did not elicit any response.
Though JetLite continues to post losses and has a “negative net worth,” according to a stock market filing by Jet Airways, the Naresh Goyal-led airline hasn’t given up on the potential of a turnaround at its subsidiary that it acquired from the Sahara Group in April 2007. Jet Airways, which has an equity investment of R1,645 crore in JetLite, is also pumping additional money into its subsidiary. It advanced an interest-free loan of R1,954 crore to its JetLite in fiscal 2014, according to a BSE filing by the company.
Jet Airways roped in US-based consultant Seabury Group in July-August 2013 to reorganize its fleet and network, in an attempt to better align it between JetLite and itself. This led to Jet Airways taking a one-time impairment charge of Rs700 crore in fiscal 2014.
“Seabury Group has valued the equity interest in JetLite and a detailed business plans has been drawn to get the airline back to profitability,” a statement issued by Jet Airways in May read. “Management has performed a sensitive analysis on values so arrived and concluded that provision for iminution/impairment of Rs700 crore will fairly reflect the recoverable amount based on prudent assessment,” it added. On the back of such fleet and network reorganization, Jet Airways expects its operations, including that of JetLite, to return to profitability by FY17.
N. Ravichandran, vice president of finance at Jet Airways said during the company’s fourth quarter earnings call his company has chalked out a roadmap for network and fleet integration with Etihad Airways – which had picked up a 24% stake in Jet Airways for Rs 2,060 crore in the Indian airline last fiscal---, and other partner airlines.
CAPA’s Kaul says that JetLite’s turnaround plan will largely depend on its fleet strategy. According to him, JetLite could either expand its capacity by adding different types of aircraft to its fleet and feed greater number of passengers to its parent company’s operations, especially international flights; or it could stick to its one aircraft fleet (comprising Boeing 737s) to optimise costs. “My sense is that that they will keep it to a one aircraft fleet,” said Kaul. JetLite could also reinvent itself away from being a pure no-frill carrier by adding limited