The price of Jet Airways share declined 7% and ended the session at Rs 308 on Friday following news reports about a financial crunch in the company.
According to a news report, Jet Airways had informed its employees that it would not be able to operate beyond 60 days if it failed to put in place cost-cutting measures including pay cuts.
The report further said the employees had been asked to take up to a 25% cut in salaries. Another news report said Jet Airways had approached investment bankers to sell a stake and this would include its founder Naresh Goyal offloading a part of the promoter’s stake in the company.
However, Jet Airways, in an exchange filing, said the news report of it telling employees that it couldn’t fly beyond 60 days was “incorrect and malicious”. Jet Airways said it has been in talks with key stakeholders including pilots and engineers to enlist their full support and cooperation for realising significant savings across all functions of the business.
The company also denied any talk of a stake sale.
Jet Airways, the second largest airline by market share, has not posted a profit for the past 11 years, barring FY16 and FY17. However, its employee costs have been on the rise. In FY18, the airline incurred Rs 3174.22 crore in employee costs, up from Rs 3084.21 in FY17 and Rs 2,532.33 in FY16.
Since the beginning of 2018, Jet Airways stock fell by more than 62.9%, and the company lost Rs 5,949 crore in market capitalisation during the same period.
Of the eight analysts who track the stock, four has given it a ‘buy’ rating, two have a ‘sell’, and two have a ‘hold’.