The country's second largest airline Jet Airways, currently battling crude oil and rupee depreciation-related headwinds, has in a surprise move deferred its earnings announcement for the first quarter.
The airline, which had reported a Rs 1,040-crore consolidated loss in the January-March quarter, was due to report earnings for April-June on August 9 and had also scheduled a board meeting for the same. However, late on Thursday night, the Mumbai-headquartered company announced that the matter had been deferred and the fresh date was not disclosed.
"The board of directors of the company deferred the matter of consideration of the unaudited financial results for the quarter ended 30 June, 2018. It may be noted that the audit committee did not recommend the said financial results to the board for its approval, pending closure of certain matters," Jet Airways said in a statement, without elaborating further.
The development comes at a time a news report said Jet Airways will axe jobs of around 500 of its ground services staff. Earlier, a report had said the airlines had told employees that it wouldn't be able to fly beyond 60 days unless there were pay cuts. Jet Airways has denied all the reports so far. "Jet Airways categorically denies all reports and speculations regarding retrenchment of ground and inflight staff. All media reports related to the same are factually incorrect and misleading," a spokesperson said.
The airline has been flying through a turbulence as fuel costs have soared, the rupee has depreciated and despite costs rising for all the players, competitive intensity in the airline industry remains high.
Jet chairman Naresh Goyal has maintained its losses reported last year were due to costs beyond its control. He added that the airlines has taken measures to keep costs in check.
"Key external factors that slowed down our momentum were, weakening of the Indian rupee, around 16 per cent increase in brent (crude) rates with consequent rise in fuel costs, industry’s inability to pass on increased costs to the consumer and no corresponding increase in ticket fares. In addition, there was a considerable increase in maintenance, landing and navigation costs during the year," he told shareholders.
He had also said he was "guilty and embarrassed" as shareholders lost money due to a sharp fall in share prices in the wake of the headwinds in the sector.
Jet Airways shares have nosedived over 63 per cent in 2018 from Rs 831.30 on the BSE end of 2017 to Rs 301.70 at close on Thursday.
Jet Airways shares were trading more than 6 per cent lower at Rs 281.05 on the BSE on Friday morning.
"Operationally we took every step possible to maintain a sharp focus on costs and worked to reduce our net debt. Our non-fuel cost per available seat-kilometer (CASK) fell by 1.8 per cent. Fleet utilisation went up." he said.
Jet Airways is also banking on new fuel efficient planes to fly it into profitable times. The company is buying 225 Boeing 737 Max airplanes over the next several years. These planes will not only consume less fuel, but also allow it to fly to newer destinations in India and abroad. Eleven of these new planes will be inducted by the airline within the current financial year, ending March 2019.
Jet Airways is not the only airline facing financial headwinds. The net profit of Interglobe Aviation, the parent of low cost carrier Indigo, the country's largest airline, nosedived 97 per cent in the first quarter. SpiceJet is scheduled to announce its quarterly earnings on August 14.
These troubles coming despite average monthly domestic passenger traffic volumes rising 21 per cent over January 2015 to June 2018 has surprised analysts.
"The spreads (RASK, revenue per available seat kilometer, less CASK) of the leading Indian airline companies have collapsed over the past two quarters, resulting in very weak financials for the companies. We note that yields of the leading airline companies have continued to languish for the past few quarters and have not even kept pace with inflation, let alone the sharp increase in input costs," said Sanjeev Prasad, co-head of Kotak Institutional Equities.
Amid the troubles, all eyes will be on the role of Jet Airways' UAE-based partner Etihad, which owns 24 per cent stake in the airline. In March this year, aviation consultancy CAPA (Centre for Aviation) had said Etihad could exit Jet, a claim denied by the Gulf carrier. Jet was a valuable partner and there were no plans to divest, it had said.
In November 2017, Jet Airways had also signed an enhanced cooperation agreement with its code share partner Air France-KLM to further develop their operations between Europe and India.
Commenting on the postponement of earnings, a Jet Airways spokesperson said that the decision had been taken as more time was needed to finalise the accounts.
“At the board meeting, the chairman of the audit committee informed the members of the board that the management and the auditors required further time to finalise the accounts and that the accounts once finalised would be approved by the audit committee and then placed before the board. The members of the board readily agreed with this,” the spokesperson said.
The airline also countered a report that its audit committee chairman, S. Vishwanathan had quit. It said that the term of Vishwanathan came to an end at the AGM held on August 9 and thus retired as director and consequently as the chairman of the audit committee after serving a full term of office.
Jet Airways shares closed down 8.4 per cent to Rs 276.40 on the BSE.