After another dismal financial performance with Rs 1,300-crore net loss in the June 2018 quarter, Jet Airways needs to address two glaring questions. One, why was the airline unable to turn around the business even after it secured fresh funding from UAE based Etihad Airways five years agoRs Two, will the latest turnaround plan be enough to revitalise the operations.
When Etihad bought 24 per cent stake in Jet in 2013, the latter had 25.2 per cent share in the Indian market while Indigo, its aggressive peer, had 27.4 per cent share. Today, Jet’s market share has fallen to 15.5 per cent whereas Indigo’s has risen to 40.7 per cent. Failing to enhance capacity, a strategy which Indigo diligently followed, and entry of new airlines such as Air Asia and Vistara affected Jet’s market position.
Consequently, Jet had to manage operations with low profit and inadequate cash flows which elevated its debt. As of FY18, it had debt of Rs 8,420 crore, of which 77 per cent was non-aircraft debt. A large part of this debt was used to tackle financial losses and working-capital requirements.
31/08/18 Rajesh Naidu/Economic Times
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When Etihad bought 24 per cent stake in Jet in 2013, the latter had 25.2 per cent share in the Indian market while Indigo, its aggressive peer, had 27.4 per cent share. Today, Jet’s market share has fallen to 15.5 per cent whereas Indigo’s has risen to 40.7 per cent. Failing to enhance capacity, a strategy which Indigo diligently followed, and entry of new airlines such as Air Asia and Vistara affected Jet’s market position.
Consequently, Jet had to manage operations with low profit and inadequate cash flows which elevated its debt. As of FY18, it had debt of Rs 8,420 crore, of which 77 per cent was non-aircraft debt. A large part of this debt was used to tackle financial losses and working-capital requirements.
31/08/18 Rajesh Naidu/Economic Times
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