Crisis-ridden Jet Airways on Monday reported a massive loss of Rs 1,323 crore for the April-June quarter as high fuel prices, a weakening rupee and low fares battered the finances of the Naresh Goyal-led airline. This is the second consecutive quarterly loss for the airline which had posted a profit of Rs 53.50 crore in the same quarter last year.
"The company has incurred a loss during the current quarter and has a negative net worth as of June 30," Jet Airways said in a regulatory filing on Monday. A negative net worth means that the total liabilities of the airline exceed the total value of its assets.
The total income of the company during the quarter rose to Rs 6,010 crore from Rs 5,648 crore in the year ago quarter. However aircraft fuel expenses for the quarter surged 53 per cent to Rs 2,332 crore. Jet Airways said it would inject funds and cut costs in excess of Rs 2,000 crore in two years as it seeks to turnaround the business.
The struggling airline will inject capital and reduce debt to cut its interest costs, the statement said, without elaborating on the size of the funds' injection. It also plans to monetise some of its assets, including the Jet-Privilege programme, which has 8.5 million members.
"The two significant proposals...infusion of capital and the monetisation of the airline's stake in its loyalty programme bode well for the long term financial health and sustainability of the airline," said Jet Airways Chairman Naresh Goyal.
The company aims to introduce fuel and cost-efficient B737 MAX aircraft to aid its 8-10 per cent growth plan and simplify its fleet by sub-leasing excess ATR aircraft to improve its profitability.
The airline, part-owned by Etihad Airways, has been facing financial difficulties but has said that it is confident it can cut costs and keep flying, dismissing reports that it had told staff airline was running out of cash.
Jet, which cut its non-fuel expenditure by 1.5 per cent in the June quarter, plans to further reduce such costs by 12-15 per cent in the next 8-10 quarters, it said.
"The company has undertaken various initiatives in relation to saving cost, optimising revenue management opportunities and enhance ancillary revenues. These initiatives are expected to result in improved operating performance," Jet Airways further stated in its regulatory filing.
Earlier this month Jet postponed its earnings announcement, after which its shares sank to a three-year low amid concerns over the airline's financial health. Jet Airways had posted Rs 1,040 crore loss in the fourth quarter 2017-18. The airline had a debt burden of Rs 8,424 crore at the end of March this year.
"For a quarter or two, our debt level will go up. There will be a short-term blip," Amit Agarwal, the airline's deputy chief executive officer had said in a post result conference call.
Jet's Rs 8,424 crore debt comprises Rs 2,054 crore of aircraft acquisition loans and around 65 per cent of this is dollar denominated. Any depreciation in the rupee raises the cost of repaying these dollar loans. The airline has a negative net worth and its auditor has made an observation regarding its ability to continue as a going concern.
The Jet management, however, had said its non-fuel cost reduction plan is on track and aims to maximise revenue by redesigning its network.
India is the world's fastest-growing aviation market, but rising fuel prices, a weaker rupee and price competition has pulled down airlines' profitability. Leading carrier IndiGo, had last month reported a 97 per cent plunge in profit for the April-June quarter.