Jet Airways faces acute financial stringency
Jet Airways Ltd has told its pilots that the airline may be grounded in 60 days unless cost-cutting measures including pay cuts are put in place, as reported by Reuters on Friday, 3rd July 2018.
Following the acute financial stringency, the authorities had requested the pilots for a 15 per cent pay cut for two years to withstand the turbulent situation, however the pilots did not agree with the proposal so far.
The company was looking in to all the possible areas to reduce the running cost and for savings to create a “healthier and a more resilient business”, a company spokesman said in a statement.
Management was in talks with all stakeholders, he added, without giving further details.
Jet Airways is looking for working capital loans but banks want the airline to show a turnaround commitment, adding that salary reduction was part of the same issue, as per an official source.
“There are some job losses across verticals but not among pilots,” the source added, declining to be named as the talks with staff were private.
Jet Airways shares plunged as much as 9 per cent on stock exchange BSE, whose benchmark index Sensex surged 410 points, or 1.1 per cent, at the day’s highest point.
Growing fuel prices and a weaker rupee are adversely affecting Indian airlines, with the country’s leading carrier IndiGo reporting a 97 per cent plunge in profit on Monday.
The company, part owned by Etihad Airways, had net debt of 81.5 billion rupees ($1.2 billion) as of end-March with the bulk of it being U.S. dollar denominated.
The management team including Chairman Naresh Goyal had informed employees that drastic measures were needed for survival of the airline.