Jet Airways (India) Ltd. has reported standalone net loss of ₹1,323 crore for the first quarter ended June 30, 2018 as compared with a net profit of ₹53 crore in the year-earlier period on higher outgo towards fuel expenses and currency fluctuation impact.
In the previous quarter, the airline had reported a net loss of ₹1,036 crore.
Fuel cost was higher by ₹269 crore compared with the previous quarter and ₹808 crore compared with the year-earlier period. During the quarter, the company recorded a foreign currency fluctuation impact of ₹364 crore.
ADVERTISEMENT
Low fares
“Macroeconomic factors led by an increase in Brent fuel price by more than 36%, a depreciating rupee and the resulting mismatch between high fuel prices and low fares primarily undermined the performance in the quarter,” the company said in a statement.
The rise in the price of Brent fuel, a depreciating rupee and a resulting mismatch between high fuel prices and low fares have adversely impacted the Indian aviation industry, including Jet Airways,” said Vinay Dube, CEO, Jet Airways.
ADVERTISEMENT
“The loss is on expected lines,” said Deven Choksey, CEO, KR Choksey Shares and Securities. “Fuel and maintenance costs were high,” he said.
“It (the result) is not so alarming. The significant increase in fuel price and currency impact affected the results. Now, they must take corrective steps and arrest [the] slide by Q4,” said Mark Martin, founder and CEO, Martin Consulting, an aviation consulting firm.
Owing to continuous losses, the company’s net worth turned negative as at June 30, 2018. The financial results in the quarter are prepared on a going concern basis. In their review of the financial results, the statutory auditors issued an unmodified opinion on the results.
The board on Monday also considered cost cutting measures, debt reduction and funding options, including capital infusion and monetisation of assets.
The management has been tasked to take this forward and accomplish it in a time-bound manner.
“The two significant proposals considered by the Board of Directors today i.e. infusion of capital and the monetization of the airline’s stake in its Loyalty programme bode well for the long term financial health and sustainability of the airline,”, said Naresh Goyal, Chairman. Jet Airways.
The company said it would achieve cost reduction of ₹2,000 crore in next two years.
A spokesperson for the Etihad Aviation Group said, “We remain committed to our strategic partnership with the airline as it explores and leverages the opportunities presented by the growing Indian aviation market.”
Separately, the DGCA has commenced a 4-day safety audit of the airline. The audit involves examination of data including on accidents, technical glitches and availability of spare parts, a senior DGCA official said.