Jet Airways aims to reduce non-fuel costs

India’s second-largest airline by market share, Jet Airways, which posted a loss of Rs 1,040 crore in the fourth quarter of financial year 2018, plans to reduce its non-fuel costs in the next two years by maximising profit from its code-sharing agreements with foreign carriers.

“We plan to reduce our non-fuel costs by 12% to 15% in the next two years, and we are taking measures to achieve this target. This reflects our efforts to reduce non-fuel CASK (cost per seat kilometre),” said Amit Agarwal, deputy CEO and chief financial officer, Jet Airways, in an analyst call on Thursday.

He added that the carrier is ensuring to maximise profits from its code-sharing agreements with foreign carriers such as Etihad and Air France-KLM. The airline is also inducting 75 Boeing 737 Max, considered to be more fuel-efficient. “Two will be delivered in June, and we will have a total of 11 of them by March 2019,” Agarwal said.

The fuel expense for the carrier rose by 31% (Rs 2,063.34 crore) in the quarter-ending March 2018, from Rs 1,282.41 crore year ago. The company’s CASK for the period increased by 4% due to high fuel prices. The total income for the quarter was Rs 6,055 crore, a decline of 3.44% from Rs 6,271.21 crore in the same quarter last year.

The fourth quarter for domestic airlines has been severely impacted by rising jet fuel prices along with weaker rupee. While SpiceJet posted a meagre increase in its fourth quarterly profit, market leader IndiGo saw a sharp decline in its number. Jet Airways was no exception.

“However, various initiatives undertaken by the company in relation to saving cost, optimise revenue management opportunities and enhance ancillary revenues is expected to result in improved operating performance. Further, our continued thrust to improve operational efficiency and initiatives to raise funds are expected to result in sustainable cash flows addressing any uncertainties,” the company said in its report.

The airline has also reported a net loss of Rs 767.62 crore, against a net profit of Rs 1,482.52 crore for financial year 2017-18.