Regional Round-Up
Trouble at Jet as losses mount
February 1st 2014
Mystery surrounds the sudden departure of Gary Toomey as chief executive of India’s Jet Airways, part-owned by Etihad Airways (24%), after he had spent only six months on the job. Read More » Neither the airline nor Toomey would comment on the sudden change after he stepped down in January. The Australian joined Jet last July. He had been chief executive of Airlines of Papua New Guinea following a long career with several Australasian carriers. He joined Qantas in 1993 and by 2000 he was running the airline’s finances and had been made a deputy managing director. After missing out on the top job at Qantas, he became chief executive of the now defunct Ansett Australia and later Air New Zealand.
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| India’s Jet Airways falls on hard times |
Insiders believe another Australian, Cramer Ball, will replace Toomey. Ball is chief executive of Air Seychelles, which is 40% owned by Etihad. He has held senior management positions at Gulf Air, Qantas Airways, Kendell Airlines and Ansett/Air New Zealand before joining the CEO of Etihad, fellow Australian James Hogan, in Abu Dhabi.
Toomey is the second chief executive and sixth senior executive to leave Jet since the airline announced Etihad planned to become one of its shareholders last April. Soon after chief executive, Nikos Kardassis, resigned. He was followed by head of commercial strategy, K.G. Vishwanath in September. Next through the revolving door at the Mumbai head office were chief commercial officer, Sudheer Raghavan and senior finance executives, Shobha Randeria and Ananth Iyer.
The management changes have come as Jet suffers financially. Consultancy CAPA said in January Indian carriers are likely to report record losses for the fiscal year with two listed carriers, Jet and SpiceJet, as well as state-owned Air India, being the worst performers.
Indian airlines lost more than US$500 million in the quarter to September 30 last year, the peak three months for Indian aviation. The deficit for the three months to December 31 is forecast to range from US$175 million to US$250 million. Full year profitability, when [Indian] airlines are reporting significant losses in the peak season, indicated the industry has “a fundamental problem with viability”, CAPA said.
It is probable that Jet’s losses for the latest financial year will wipe out the funds put into the airline by Etihad’s 24% investment. CAPA added: “Etihad may need to re-capitalize Jet in the coming year, which may include increasing its shareholding to 49%. It also is possible Jet could be de-listed in the near term.” Jet has recorded losses of US$455 million since 2007.
