Thursday, November 15, 2018

With Jet stuck between hope and despair, Naresh Goyal is running out of time

New Delhi: Naresh Goyal, Chairman of Jet Airways, India’s second-biggest airline by market share, began his career in aviation as a humble cashier in his maternal uncle Seth Charan Das Ram Lal’s travel agency, East-West Agencies, in 1967. He rose in his field to launch an airline of his own 25 years ago. Today, Jet AirwaysNSE 24.99 % — saddled with debt, facing a challenging market, grappling with low fares and high fuel prices — is struggling to stay afloat. India’s biggest full-service carrier, Jet has been unprofitable in nine of the past 11 years.

In August, Jet seemed to be on the brink of a crisis when its senior management took pay cuts of as much as 25% and it also asked pilots and technicians to take similar cuts. Facing one of the worst financial crisis of its existence, Jet has delayed salaries, grounded planes, rationalised its network by cutting flights and laid off staff. In October, credit rating agency ICRA downgraded Jet Airways’ long-term borrowing programme. Jet is also facing investigations by the ministry of corporate affairs over complaints of irregular transactions.

After two consecutive years of profits in fiscal 2016 and 2017, Jet incurred losses of about Rs 76 crore during FY2018. Jet Airways has reported its third straight quarterly loss this year. It posted a net loss of Rs 1,292 crore for July-September quarter. It made a net profit of Rs 46 crore a year earlier in the corresponding period. The cost of servicing its Rs 8,100 crore debt is high.
14/11/18 Economic Times