Jet Airways (India) Ltd will be unable to fly beyond 60 days unless cost-cutting measures including pay cuts are put in place, and it has approached investment bankers again to help sell a stake in the carrier, local media reports said on Friday.
The management team, including Chairman Naresh Goyal, has informed employees in face-to-face meetings in recent days in Mumbai and Delhi that the airline’s financials are in a bad shape and drastic measures needed to be taken to cut costs, the Economic Times daily reported, citing two company executives.
Jet Airways was not immediately available for comment when contacted by Reuters. Shares of the company fell more than 5 percent in early trade in Mumbai.
“In line with its stated focus of creating a healthier and a more resilient business, Jet Airways has been implementing several measures to help it reduce cost as well as realise higher revenues, for desired business efficiencies,” the company said in response to Economic Times without specifically mentioning the 60-day deadline given to employees.
Separately, newspaper Mint reported that Jet Airways has approached investment bankers again to help sell a stake in the carrier, citing two people with direct knowledge of the matter.
The airline is facing several challenges including a surge in fuel prices, weaker rupee and intensifying competition.
“Jet Airways is looking to raise immediate cash and the transaction may include Jet Airways founder Naresh Goyal offloading a part of the promoter’s stake in the company,” one of the sources told Mint on condition of anonymity.
Earlier in the week several media reported that Jet Airways had asked its employees to take a pay cut of up to 25 percent due to rising costs.
Stock slumps 6% in morning trade
Shares of Jet Airways today slumped nearly 6 per cent in morning trade on the bourses after reports surfaced that the company’s financials are in bad shape and drastic measures need to be taken to cut costs.
Shares of the company today opened on a weak note at Rs 324.80, then fell 5.72 per cent to a low of Rs 312.25 on BSE.
Similar movement was seen on the NSE as well, where the stock of the company opened at Rs 323.90, then fell to a low of Rs 312.15, down 5.73 per cent over its previous closing price.
According to media reports Jet Airways has informed its employees that the airline will not be able to operate beyond 60 days unless cost cutting measures, which include pay cuts, are put in place.
Earlier reports had surfaced that the airline has proposed up to 25 per cent pay cut for employees, but the proposal has been rejected by pilots and and engineers.
The full-service carrier was believed to be in discussions with certain sections of employees on the salary cut proposal, which has been mooted amid efforts to save costs.
Jet Airways, which completed 25 years of operations earlier this year, had 16,558 permanent employees as on March 31, 2018.
Besides, there were a total of 6,306 temporary/casual employees, as per the airline’s annual report for 2017-18. (PTI)