New Delhi: Jet Airways, India's second-biggest carrier, forecast yesterday a return to profit in three years through cost-cuts, route-sharing with new partner Etihad Airways and restructuring of hefty debt.
The publicly traded airline, which has not posted an annual profit since 2007, has been struggling in an overcrowded market beset by cut-throat fare wars, high fuel costs and shoddy infrastructure.
"The game plan is in place, it's now about delivery," Jet Airways' new chief executive Cramer Ball told reporters in New Delhi.
"It's a three-year plan — 2015 we will reduce losses, 2016 we will consolidate and 2017 we'll have profitability," he said.
Ball was speaking at the airline's first news conference with Etihad since India cleared in May the fast-growing Abu Dhabi airline's purchase of a 24-per cent stake in the Indian carrier for Rs21 billion ($330 million).
Jet's shares jumped nearly six per cent on the turnaround plan before finishing up 3.5 per cent at Rs264.95. Ball, an Australian, said Jet was already profitable on international routes which contribute 43 per cent of revenues, a figure he projected would rise to 63 per cent by 2015.
Six major airlines
All six major airlines, except leading carrier IndiGo, have been haemorrhaging money but analysts project a brighter future longer-term thanks to India's fast-growing growing middle class.
India's carriers lost a total $1.3 billion in the financial year to March, the Centre for Asia Pacific Aviation consultancy calculates. Jet's net loss in the last financial year ballooned to 41.3 billion rupees from a 7.8-billion loss the previous year. Debt stood at $1.8 billion. Etihad's Jet stake enables it to compete better with regional rivals such as Qatar Airways and Emirates which transport a large slice of Indian passenger traffic to the Gulf and beyond.
Etihad Airways' purchase of a minority stake in Jet came after the government relaxed foreign ownership rules to allow overseas carriers to buy up to 49 per cent of local airlines. Jet's hopes of returning to profit come as Indian skies are set to become more congested.
Singapore Airlines and Tata Sons are due to launch a new carrier by October. Asia's biggest budget carrier AirAsia launched an Indian airline in June.
The chief executive officer said Jet would look at disposing of some planes to staunch losses.
Etihad Airways chief executive officer James Hogan called India one of the "most dynamic markets in the world" with 42 million passengers travelling annually internationally.