The decisions -- which included appointment of a new CEO, cleaning up of balance sheet, pruning of overvalued assets, cost restructuring and changes in service and fleet plans – were taken today at a board meeting attended for the first time by representatives of Abu Dhabi-based Etihad Airways, which has acquired a 24 per cent strategic stake in Naresh Goyal-led Indian carrier.
The carrier, to be headed by Australian national Cramer Ball (formerly with Etihad) as its new CEO going forward, posted a net loss of Rs 2,153 crore for the quarter ended March 31, 2014, while its consolidated loss for the full fiscal widened to Rs 4,129 crore.
It is the fifth straight quarterly loss for the airline.
These are the biggest ever losses suffered by Jet Airways, which had last reported a full-year profit in fiscal 2010-11, when it posted a meagre profit of Rs 9.69 crore on stand alone basis, although it was in losses on consolidated basis at that time also.
Its fourth-quarter loss in 2012-13 stood at Rs 495 crore, while its consolidated full-year loss in that fiscal was Rs 779 crore.
For 2013-14 fiscal, Jet Airways reported operating loss of Rs 2,076.2 crore and a non-cash extraordinary write down of Rs 936 crore, aircraft-on-ground of Rs 417.6 crore, and impairment of goodwill of Rs 700 crore.
Jet Chairman Naresh Goyal said, "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."
Jet said it has also set up a task force to implement a major business restructuring exercise following "an extensive cost benchmarking study by independent advisors".
The company said that "tough decisions (have been) taken to clean up balance sheet and lay foundations for healthy financial future", while steps are being taken for new network and fleet plans along with "significant product enhancements".
The board also "approved details of a three-year business plan to reshape the airline and return it to profitability," Jet said in a statement, but did not specify the details of planned cost cutting measures.
"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," it said. On stand-alone basis, Jet Airways' total income in FY'14 increased to Rs 17,713.47 crore from Rs 17,403.17 crore in FY'13.
The quarterly total income grew nearly 10 per cent to Rs 4,678.17 crore during the January-March 2014 period. The net loss on stand-alone basis widened to Rs 3,667.85 crore from Rs 485 crore in FY'13.
About the new CEO Ball, Jet said he comes with "extensive experience at the highest levels of international, domestic and regional aviation sectors."
Etihad President and CEO James Hogan and Chief Financial Officer James Rigney also attended Jet board meeting for the first time, following conclusion of all regulatory approvals for the UAE carrier's equity investment in Jet Airways.
The investment, which totals USD 750 million, comprises Rs 2,057.66 crore (USD 380 million) for a 24 per cent stake in Jet Airways, USD 70 million towards purchase of three slots at London Heathrow airport, USD 150 million to secure a 50.1 per cent stake in the JetPrivilege Frequent Flyer Programme; and USD 150 million through HSBC.
James Hogan said that Etihad was "a long-term strategic investor and committed to supporting Jet 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," he noted.
Airline advisors Seabury APG have completed a new long term network and fleet plan which would be implemented to optimise Jet's domestic and international operations.
Jet would also implement measures to better delineate the individual brands of both Jet Airways and JetKonnect in the domestic market.
In parallel the airline has also announced a series of initiatives to enhance its product and service offering. These include the standardisation and reconfiguration of the B737 fleet and seat count optimisation on the wide-body B777 and A330 fleets.
"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," Goyal said.