Jet Airways made this announcement:
The Board of Directors of Jet Airways met on November 12 to assess and announce the Company’s financial results for the second quarter of FY19, based on the recommendation of the Audit Committee. The Board also reviewed the progress of the Company’s turnaround strategy outlined last quarter, together with an update on the success of other parallel measures being undertaken by the management to revive the economic health of the Company.
The tough industry environment in the backdrop of a sharp rise in Brent fuel price by more than 50% over Q2 FY18, a depreciating rupee and a challenging pricing situation in an over-capacitated domestic market, continued to undermine Jet Airways’ performance for the quarter, which reported a consolidated net loss of INR 1,261 crores for the period ended 30th September 2018, in comparison to a net profit of INR 71 crores in Q2 FY18. For the period July to September 2018, the airline reported an EBITDAR of INR 239 crores versus an EBITDAR of INR 1,084 crores in Q2 FY18.
Despite the above, the airline demonstrated progress on its business and operating fundamentals, registering a 7.3% growth in Available Seat Kilometres (ASKMs) over Q2 FY18, and a 10.5% growth in Revenue Passenger Kilometres (RPKMs), flying 7.45 million guests – up by 2.2% from Q2 FY18. In spite of currency devaluation, Jet Airways managed to maintain its non-fuel CASK for the quarter at almost the same level as last year (Q2 FY18), and in fact, excluding the foreign exchange impact, the CASK is better by 4.2% versus last year (Q2 FY18), reflecting the organisation’s efforts to reduce costs across its entire business spectrum.
Productivity and efficiency gains for the quarter yielded significant enhancements in operational statistics, improving the airline’s On-time performance to 84% (up 11 notches) than Q2 FY18. Similarly, average load factors increased by 2.5% to 84%, ancillary revenues grew by 9%, and cargo revenues increased by over 13.7% over Q2 FY18. In addition, yields from Cargo also registered an impressive YoY increase.
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 INR 2000 crores over the next two years via strategic initiatives in the areas of sub-fleet simplification, reduction of maintenance as well as selling and distribution expenses, renegotiation of contracts, together with a more productive resource deployment geared to enhance profit and revenue. In fact, the company has already realized cost saving of over INR 500 crores to date (in H1FY19).
Simultaneously, Jet Airways is exploring further opportunities to enhance revenues by undertaking several calibrated steps to improve yields in the domestic market, fine tune revenue management practices and use the advantages of connectivity over its hubs to improve volumes. At the same time, the airline is actively engaged in realising improvements in revenue in the international markets by leveraging the strengths and synergies of its network and alliance partners.
During the quarter, Jet Airways also expanded its codeshare cooperation with international partners such as Delta Air Lines, Etihad Airways, Korean Air, Malaysian Airlines, and Bangkok Airways delivering incremental growth and choice for its guests. Revenues from codeshare and interline guests for Q2 FY19 rose by 30.9% even as guest numbers grew by 8.6% on a YoY basis.
Notwithstanding the above measures, Jet Airways is undertaking a series of initiatives with a view to enhance economic viability, efficiencies and productivity to ensure the longterm health of the business.
The airline has embarked on a comprehensive review and consolidation of its network involving routes and markets, as well as products and services offered. The strategy includes concentration of capacity, enhancing frequency, density and hub connectivity. The measures will include rationalisation of operations on select, uneconomic routes and the redeployment of these assets to more productive and economically efficient international as well as domestic sectors, closely aligning capacity with the demand characteristics of specific markets.
With the induction of the state-of-the-art Boeing 737 MAX progressing as per schedule, 11 of which are expected to be inducted in its fleet during this fiscal year, Jet Airways will leverage the fuel efficiency and longer range of its existing and forthcoming MAXs to replace those with higher operating costs on both domestic and international sectors. As a part of this network consolidation, the overall scale of operations (ASKMs) however, will continue at the same level as the airline currently operates.
The airline is launching 3 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 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.
Based on market dynamics, the review of the Company’s network and operations, both on domestic and international routes, will continue to be an on-going process to help deliver a more strategic, efficient, and economically viable network with a focus on profitability rather than market share.
Vinay Dube, CEO, Jet Airways said, “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.”
“While we navigate the challenges posed by the current industry environment, our focus and attention remains on safety and operational reliability. We are confident that we will overcome our current challenges, honor our commitments to our stakeholders, and deliver a more strategic, efficient and financially viable airline.”
Jet Airways Group Q2, FY19 highlights
- Total revenue up 6.9% at INR 6,363 crores compared to INR 5,952 crores in Q2, FY18
- EBITDAR of INR 239 cr in Q2 FY19 against INR 1,084 cr in Q2 FY18
- Available Seat Kilometers up 7.3% at 15.28 billion over Q2, FY18
- Passengers carried increased by 2.2% to 7.45m over Q2, FY18
- Interline and Codeshare traffic increased by 8.6% over Q2, FY18
- Revenue from codeshare and interline partners increased by 30.9% compared to Q2 FY18
- Cargo revenue up by 13.7% to 514 cr over Q2, FY18
- Non-fuel CASK maintained at almost the same level as Q2 FY18
Beyond India, Jet Airways operates flights to key international destinations in South East Asia, South Asia, Middle East, Europe and North America. The Jet Airways Group currently operates a fleet of 124 aircraft, comprising Boeing 777-300 ERs, Airbus A330-200 / 300, the latest Boeing 737 MAX 8, Next Generation Boeing 737s and ATR 72-500 / 600s.
Top Copyright Photo (all others by Jet Airways): Jet Airways Boeing 777-35R ER VT-JEX (msn 35163) LHR (SPA). Image: 941772.
Jet Airways aircraft slide show: