Jet Airways sends another mayday signal! Posts net loss of Rs 1,297 crore in Q2FY19

As expected, private carrier Jet Airways, which is trapped in a financial crisis, posted a net loss of Rs 1,297. 46 crore in the second quarter of FY19 (Q2FY19). This loss was against a net profit of Rs 49.63 crore recorded in the corresponding period of previous year. Q2FY19 net loss, however, has narrowed - it witnessed a loss of Rs 1,323 crore in Q1FY19. 

On the other hand, revenue from operations of Jet Airways was at Rs 6,161.15 crore, rising by 9.50% compared to Rs 5,626.61 crore a year ago same period. However, it was sequentially up by 2.50% versus Rs 6,010.46 crore in Q1FY19. 

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, honour our commitments to our stakeholders, and deliver a more strategic, efficient and financially viable airline.”

Jet Airways has been struggling with cash crunch currently, and investors have lost faith in the company. 

The cash crunch forced the airline to first ask its own employees to agree to a salary cut, then it delayed salaries, grounded a few jets, but all in vain and now the airline finds that its debt obligations are maturing this year. 

Jet Airways situation suggests that its cash flow is very weak at the moment. This is something to be blamed on rising aviation turbine fuel cost, lease rentals expense, depreciating rupee, fare war among domestic carriers and many other high expenses.

Interestingly, the impact of fuel cost and lease rental continued to be witnessed during the Q2FY19 quarter as well. 

Jet Airways aircraft fuel cost was at Rs 2,419.76 crore which has increased by 58.60% from Rs 1,525.66 crore in Q2FY18 and up by 3.74% from Rs 2,332.49 crore in Q1FY19. 

Meanwhile,  Aircraft and Engines Lease Rentals of Jet Airways were at Rs 684.33 crore higher by 18.98% as against Rs 575.15 crore in Q2FY18 and up by 7.44% from Rs 636.94 crore in Q1FY19. 

For the six months period of FY19, Jet Airways revenue stands at Rs 12,171.61 crore growing by single-digit of 7.94% as against Rs 11,275.48 crore in H1FY18.

Morever, the company has recorded net loss of Rs 2,620.46 crore compared to net profit of Rs 103.13 crore in H1FY18. 

In its press release, Jet Airways stated that, at the strategic level, the Company remains committed and is on track to realise most of the outcomes that were outlined as part of its turnaround strategy last quarter, including cost savings in excess of Rs 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 Rs 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.

Other key highlights of the result were: 

• EBITDAR of Rs239 cr in Q2 FY19 against Rs1,084 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

Share price of Jet Airways today finished at Rs 242.05 down by Rs 15.35 or 5.96% on Sensex.