Wednesday, July 23, 2014 11:49 am
NEW DELHI – Jet Airways, India’s second-biggest carrier, forecast Wednesday a return to profit in three years through cost-cuts, route-sharing with new partner Etihad Airways and restructuring of hefty debt.
The publicly traded airline, which has not posted an annual profit since 2007, has been struggling in an overcrowded market beset by cut-throat fare wars, high fuel costs and shoddy infrastructure.
“The game plan is in place, it’s now about delivery,” Jet Airways’ new chief executive Cramer Ball told reporters in New Delhi.
“It’s a three-year plan — 2015 we will reduce losses, 2016 we will consolidate and 2017 we’ll have profitability,” he said.
Ball was speaking at the airline’s first news conference with Etihad since India cleared in May the fast-growing Abu Dhabi airline’s purchase of a 24-percent stake in the Indian carrier for 21 billion rupees ($330 million).
Jet’s shares jumped over five percent on the turnaround plan before retreating slightly to trade up four percent at 266.35 rupees.
Ball, an Australian, said Jet was already profitable on international routes which contribute 43 percent of revenues, a figure he projected would rise to 63 percent by 2015.
All major Indian airlines, except leading carrier IndiGo, have been haemorrhaging money but analysts say the sector has a brighter future longer-term thanks to a fast-growing growing middle class.
India’s carriers lost a total $1.3 billion in the financial year to March, the Centre for Asia Pacific Aviation consultancy calculates.
Jet’s net loss in the last financial year widened dramatically to 41.3 billion rupees from a 7.8-billion loss the previous year, as it cleaned up its balance sheet and took a one-off charge on its low-cost carrier Jetlite.
Etihad’s Jet stake enables it to compete with regional rivals such as Qatar Airways and Emirates which transport a large slice of Indian passenger traffic to the Gulf and beyond.
Etihad’s purchase of a minority stake in Jet came after the government relaxed foreign ownership rules to allow overseas carriers to buy up to 49 percent of local airlines.
Jet’s hopes of returning to profit come as Indian skies are set to become more congested with Singapore Airlines and Tata Sons due to launch a new carrier within the next few months.
Asia’s biggest budget carrier AirAsia launched an Indian carrier in June.
Ball said Jet would look at disposing of some planes to rationalise its fleet to staunch losses.