Mumbai, Nov 30 (): Jet Airways hinted on slashing cost operations including salaries and reducing staff size.
Jet Airways, which has 113 aircraft, flies to 70 destinations and has been the first existing airline to benefit from the government’s decision to allow FDI up to 49% in local airlines.
Jet Airways need to cut costs as it combines its operations with the Abu-Dhabi-based Etihad, which has bought a 24% stake.The warning comes after Jet posted a record loss of Rs.1,000 crore in the September quarter and analysts feel that a major part of the fund infusion from Etihad may have been wiped out.
The deal worth $900 million split up as $379 million in equity in Jet Airways, $150 million as equity in Jet Airways’ frequent flyer program, $70 million got from the leaseback of three Heathrow airport slots and $300 towards debt financing.
Naresh Goyal, owner of Jet Airways announcing the closure of the deal with Etihad told the workforce that the months ahead will be critical and the need to deliver financial benefits for all shareholders is important.
Goyal said Etihad representatives have joined Jet Airways director Board. Sudheer Raghavan, CCO has quit.
Jet’s CEO and CFO had quit this year after Etihad moved in.The airline is likely to align its operation and feed Etihad’s hub at Abu Dhabi. The message is preparing the employees for upcoming changes both in ethics, standard, management and organization.
Jet will be an Etihad-controlled airline now, and there will be several changes in management, which are seen as positive trends. Jet’s stocks fell on BSE, while it gained at the exchange’s benchmark Sensex.
The Jet -Etihad deal is facing a court case filed by Dr Subramaniam Swamy alleging that the deal would harm Indian airlines in Abu Dhabi route. He said the aviation ministry was pushing through the opening of Abu Dhabi route to help Jet Airways clinch the Etihad deal.