Mumbai: Jet Airways (India) Ltd on Monday reported a second consecutive quarterly loss in 2018-19 on higher fuel costs and foreign exchange losses. Jet Airways reported loss of ₹1,297.46 crore in the September quarter (Q2) on standalone revenue of ₹6,236.69, as against a profit of ₹49.63 crore and standalone revenue of ₹5,758.18 crore in the year-ago period. The Naresh Goyal-controlled airline had reported ₹1,323 crore loss during the June quarter of FY19.
Jet Airway’s September quarter results didn’t live up to analyst expectations. A Bloomberg poll consisting of three brokers had pegged Jet Airway’s September quarter loss at ₹1,118.20 crore on the back of a standalone revenue at ₹6,303.30 crore.
“At the strategic level, the company remains committed and is on track to realize most of the outcomes that were outlined as part of its turnaround strategy last quarter, including cost savings in excess of ₹2,000 crores over the next two years...,” Jet Airways said in a statement on Monday. India’s largest full service carrier has already realized cost savings of over ₹500 crore to date (March-August 2018 period).
Jet Airways, which had a domestic market share of 14.2% in September, was widely expected to post a loss in Q2 on rising costs. In the past 12 months, Brent crude has gained 16.46% to $70.98 a barrel; the rupee has weakened 10.59% against the dollar during the same period. The airline’s costs (total expenses) during Q2 rose to ₹7,534.15 crore from ₹5,708.55 crore in the year-ago period. Fuel costs increased to ₹2,419.76 crore from ₹1,525.66 a year ago.
“With our clearly defined focus on profitability, we are in the midst of turning the ship around. We remain closely engaged with all our partners, who acknowledge the challenges faced by the Indian aviation industry and have been very supportive,” Jet Airways chief executive Vinay Dube said in a statement.
“While we navigate the challenges posed by the current industry environment, our focus and attention remains on safety and operational reliability,” Dube added.
Cash-strapped Jet Airways, which is seeking to raise fresh funds and boost operational efficiencies, has appointed Goldman Sachs Group and Boston Consulting Group (BCG) as advisers to achieve these goals, Mint had reported on 30 October. The airline needs to urgently raise cash to stay afloat, as a rally in jet fuel prices and a weak rupee have ruined its financial health.
According to analysts tracking the aviation sector, Jet Airways has been affected by higher oil prices, a falling rupee, and falling yields due to the airline’s inability to pass on costs to customers. Jet Airways, essentially a full-service carrier, also faces stiff competition from budget airlines.
“The aggressive pricing strategies adopted by no-frill carriers has hurt Jet Airways adversely,” said an analyst with a foreign brokerage. “Unless, it (Jet Airways) is able to bring down its non-fuel costs significantly and raise fares, it’s expected to bleed in the coming quarters.”
Jet Airways will induct 11 fuel-efficient Boeing 737 Max aircraft during this fiscal that will help it cut costs, the airline said.
“The airline is launching three additional services to Singapore from Mumbai, Delhi and Pune, and in early November, commenced its operations to Manchester from Mumbai. The airline will also launch additional frequencies between Delhi-Bangkok, Mumbai-Doha, Delhi-Doha, Mumbai-Dubai and Delhi-Kathmandu during the winter schedule,” the Jet Airways statement said.
The airline continues to engage with financial stakeholders for supporting its funding requirements till it starts generating operational surplus and is actively working on the monetization of its assets and capital infusion, it added.
On Monday, Jet Airways shares fell 5.96% to ₹242.05 on the BSE while the benchmark Sensex lost 0.98% to end the day at 34,812.99 points. The airline’s results were announced after the market hours.