Jet Airways holds back 25% of staff wages
India’s cash-strapped Jet Airways has delayed the payment of 25% of wages owed to pilots, engineers and selected senior staff. Read More »
The airline was due to pay half the wages for August on September 11, followed by the second half on September 26. But half of that instalment, or 25%, has been withheld until October 9.
“The company is committed to honouring its obligations and shall make every effort to release the remainder by October 9, 2018,” Jet’s chief people officer, Rahul Taneja, said in an e-mail.
The Naresh Goyal-controlled airline had informed staff their salaries for September and October could also be delayed.
In August, it became clear that Jet Airways’ money worries were more serious than thought. In its first quarter to June 30, Jet Airways reported a net loss of 13.2 billion (US$198 million), a reversal from a 53.5 million rupee profit in the year-ago period.
The Mumbai-headquartered carrier blamed a 36% increase in fuel costs, a low fare environment and depreciation of the Indian rupee against the US$ for the poor performance.
Jet Airways’ revenue improved 5.2% in the first quarter, capacity expanded 9.4% and traffic increased 7.6%. Non fuel unit costs declined by 1.5%. The carrier is proceeding through a new cost-cutting drive intended to reduce overheads by 12%-15% by 2020, CEO, Vinay Dube, told Orient Aviation earlier this year.
The airline is seeking a capital injection of up to US$400 million from a new share issuance. Its current market capitalization is US$450 million. Issuing US$400 million in fresh shares would be a significant dilution of present shareholder equity.
Jet Airways has been struggling financially for years. For the 2017-2018 year to March 31, the airline announced a net loss of US$90.3 million, down from an INR15 billion net gain in the previous 12 months. Jet Airways has posted losses in nine of the last eleven fiscal years. In the meantime, Boeing has agreed to return a portion of pre-delivery deposits paid by Jet when it ordered the first 75 of its commitment for 225 B737 MAXs