Organisational re-structuring, optimising sales and distribution costs, customising fares and redesigning its network are some of the issues likely to be discussed at the Jet Airways board meeting on August 27. The company has already said that apart from taking up the company’s unaudited financial results for the April-June quarter, cost reduction measures and a restructuring plan will be discussed.
Manpower rationalisation is important for Jet as it is considered to be top-heavy, with around 25 vice-presidents.
Though reportedly its top level executives have taken a pay cut of 35% and at VP level of about 25%, this is not considered enough and there’s scope for more cost-cutting, industry sources said. However, the company’s efforts to persuade its pilots to take a pay cut had failed recently.
Jet Airways, the second-largest airline by market share, has not posted a profit for the past 11 years, barring FY16 and FY17, but its employee costs have been on the rise.
Over the past five years, employee costs have grown at a CAGR of 13.7%, while revenues grew at just 4.8%. In comparison, Jet’s competitor IndiGo’s revenue during the same period on a CAGR basis grew by 20.13%, while its employee costs went up by 28.63%. The company has been looking at ways to reduce costs amid high oil prices and intense competition.