Air & Cosmos - International logo

Advertising Advertising
Jet Airways announces cost-cutting measures
Jet Airways Boeing 737 MAX. © Boeing

Jet Airways announces cost-cutting measures

Jet Airways has announced a series of cost-cutting measures after plunging into the red for the first quarter of FY19.

Jet Airways has announced a series of cost-cutting measures after swinging to a net loss of around €160m on sales of €760m (+5.2%) in the first quarter of FY19, compared with a €7m net profit in the previous quarter.

The airline blamed the result primarily on a 36% increase in Brent fuel price, a depreciating rupee and the resulting mismatch between high fuel prices and low fares.

The board of directors is considering various cost-cutting measures, debt reduction and funding options, including infusion of capital, monetization of assets including the company's stake in its loyalty programme.

Given the challenging business environment, Jet Airways has been implementing additional measures to reduce costs and achieve greater efficiencies of operations. The turnaround strategy includes:
• a comprehensive cost reduction programme that aims to cut costs by more than €240m over the next two years. The programme covers maintenance costs, selling and distribution costs, fuel rate and optimisation, debt and interest cost reduction and enhancement of crew and manpower productivity;
• induction of fuel- and cost-efficient Boeing 737 MAX aircraft contributing to the stated 8-10% growth plan. During the quarter, the airline introduced its first 737 MAX aircraft, with another 10 expected by the year end. The airline plans to introduce a total of 225 737 MAX aircraft over the coming decade;
• revenue enhancement programme, delivering 3-4% growth in RASK through tactical and strategic initiatives around network, pricing, inventory management and sales;
• product and service improvements;
• leveraging the JetPrivilege programme;
• balance sheet restructuring to reduce interest payments;
• fleet simplification, including wet lease of excess ATR aircraft and simplification of sub-fleet complexity of Boeing 737s.

On the positive side, the airline reported robust growth through partnerships and codeshares on its international network. Revenues from codeshare and interline guests for Q1 FY19 rose by 29.3% even as guest numbers grew by 5.1% on a YoY basis.

During the quarter, Jet Airways expanded its codeshare partnerships with a new agreement with AeroMexico for travel between Mexico City and Delhi and Mumbai via London Heathrow.

By continuing your visit to this site, you agree to our use of cookies to deliver content and services tailored to your interests.