Ahead of stake sale, Jet Airways cuts costs, trims debt

MUMBAI, FEB. 4: 

Jet Airways, whose promoters are in talks with Eithad Airways for a strategic stake sale, said it will continue with its cost-cutting plans and pay off $400 million (about Rs 2,200 crore) of loan in the next fiscal.

The airline had a total debt of $2.16 billion (about Rs 11,800 crore) as of December 31, down from $2.6 billion (about Rs 14,300 crore) at the end of March 2012.

Jet Airways is steadily paying off debt and has got commitments from banks for working capital loans, K. G. Vishwanath, Vice-President, Commercial Strategy and Investor Relations, told analysts in a conference call on Monday. The average cost of debt for the airline is around 6 per cent and its cash position stands at Rs 740 crore, Vishwanath added. The airline is also taking up active steps to reduce employee costs by cutting down on the number of expat pilots. “The number of expat pilots by the end of March 2012 was 230. We have reduced these numbers by not renewing the contracts of these pilots. Our focus will be to train Indian pilots,” said Sudheer Raghavan, Chief Commercial Officer.

The airline has lowered staff costs by reducing the numbers of cabin crew and ground staff. On year-on-year basis, there were 1,139 job cuts. However, the airline has not given any increment or bonus to its employees this past year. Currently, labour trouble is brewing with pilots unhappy with proposed salary hikes. “We are negotiating with the employee groups on bonus and increment issues, which we expect to complete in the next one or two months,” Raghavan added.

Jet Airways stock closed 2.87 per cent down at Rs 604.80 on the BSE on Monday.

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