Jet Airways approves details of business plan after loss

"The Jet Airways Board met in Mumbai on Tuesday, 27 May 2014 and agreed to a series of critical measures which will lay the foundations to rebuild the business," the company said in a statement.

Naresh Goyal, Chairman of Jet Airways said in the statement: “We need to take stringent measures to ensure our success in this challenging and competitive aviation industry. There can be no short-term solutions. The changes required will take time to implement.”

“Our first priority on the journey to profitability will be to establish a more solid financial foundation for this airline," he said.

In one of its first steps, the Board and management team worked to clean up the balance sheet, which includes writing down overvalued non-cash assets.

Jet Airways today reported a full year operating loss of INR 2,076.2 crores (US$346 million) and a non-cash extraordinary write down of INR 936 crores (US$156 million), aircraft-on-ground of INR 417.6 crores (US$70 million) and impairment of goodwill of INR 700 crores (US$117 million). Total reported losses for the year ended 31 March 2014 amounted to INR 4,129.8 crores (US$689 million).

The airline also announced the appointment of Cramer Ball as its new Chief Executive Officer.

Mr Ball 46, an Australian national, is an accountant and an airline executive with extensive experience at the highest levels of international, domestic and regional aviation sectors.

Etihad Airways President and Chief Executive Officer, James Hogan, and the airline’s Chief Financial Officer, James Rigney, attended the board meeting for the first time, following the conclusion of all regulatory approvals for the UAE carrier’s equity investment in Jet Airways.

The investment, which totals US$750 million, comprises INR 2,057.66 crores (US$380 million) for a 24 per cent stake in Jet Airways; US$70 million towards the purchase of three slots at London Heathrow airport; US$150 million to secure a 50.1 per cent stake in the JetPrivilege Frequent Flyer Programme; and US$150 million through HSBC.

James Hogan said: “We are delighted to be investing in Jet Airways at this critical point in its history. We are a long-term strategic investor and committed to supporting Jet Airways as it re-engineers its business to achieve sustainable profitability.”

“The opportunities and benefits for both carriers are enormous. Each airline will be strengthened, as will the economies of India and the UAE. By linking our two networks, and adding new flights, new routes and more codeshare options, travel to, from and within India will become much easier," Hogan said.

"Following an extensive cost benchmarking study by independent advisors, Jet Airways has established a taskforce to implement a major restructuring of the business," read the company statement.

In parallel the airline also announced a series of initiatives to enhance its product and service offering which include the standardisation and reconfiguration of the B737 fleet and seat count optimisation on the wide-body B777 and A330 fleets.

Jet Airways will also implement measures to better delineate the individual brands of both Jet Airways and JetKonnect in the domestic market.

Goyal said: “I am optimistic about the future and confident these measures will strengthen our financial position and enable Jet Airways to better serve its loyal customer base and support the growth of travel and tourism in India.”