Full service airline Jet Airways saw losses worsen in the quarter ended June 30 as the impact of a fuel price hike and the falling rupee weighed heavily on the carrier’s financial performance.

The country’s oldest private airline booked a net loss of ₹1,323 crore, compared with a profit of ₹53 crore in the same quarter last year.

Fuel expense, which was about 31 per cent of the company’s total expenses during the quarter, shot up by as much as 52 per cent to ₹2,332 crore from ₹1,524 crore last year. The airline was also unable to capitalise on the booming domestic aviation market and saw a measly 1.9 per cent rise in its revenues in the April-June quarter to ₹6,067 crore from ₹5,954 crore last year.

Cost-cutting steps

The board of directors also listed down cost-cutting measures that the airline will undertake to turn profitable. Jet Airways expects they will result in more than ₹2,000 crore of cost reduction over the next two years. The cost reduction programme covers various facets of its operations, including maintenance costs, selling and distribution costs, fuel rate and optimisation, debt and interest cost reduction and enhancement of crew and manpower productivity.

“The two significant proposals considered by the board today, that is, infusion of capital and the monetisation 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.

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.”

Vinay Dube, CEO, Jet Airways, said, “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.”

“We are implementing a host of measures to reduce costs and grow revenue, while retaining our focus on our guests. I am confident that the various transformation initiatives identified and under implementation by the company will help in addressing the challenges faced by us. In fact, several such transformation initiatives have already started to deliver positive results.”

The results came in after the airline deferred it two weeks ago, with the regulators posing several questions over the delay. The airline continued to maintain that it just needed some more time to prepare the results.

“The company has incurred a loss during the current quarter and has negative net worth as on June 30, 2018,” Jet auditors told stock exchanges.

The auditors continued to cast doubts over the airline’s ability to continue operating unless it raised fresh funds. “The appropriateness of assumption of going concern is dependent on realisation of the various initiatives undertaken by the company and its ability to raise requisite finance/generate sustainable cash flows to meet its obligations, including financial support to its subsidiary companies.”