May stop flying without major cuts: Jet Airways

Jet Airways is suffering major turbulence and may cease flying in 60 days without major cost cuts, reports said yesterday, sending shares in the carrier tumbling.The dire warning was made in talks between managers and employees in recent days, the Economic Times reported, quoting an unnamed senior executive.The claims, as well as another report in the Mint daily that the airline was in talks with investors to raise cash, sent Jet Airlines’ shares down 7%.Mint quoted an unidentified source who said the talks included founding chairman Naresh Goyal potentially selling some of his 51% stake in India’s number-two carrier by market share.Etihad Airlines of the United Arab Emirates currently owns a 24% stake in the firm.A previous Etihad offer to hike its stake was spurned by Goyal, Mint reported.According to the airline, the ongoing talks with employees, including pilots, is 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 airline said in a statement.“Some of these include sales and distribution, payroll and maintenance, among many others. As part of this approach, the airline management is in dialogue with key stakeholders to enlist their full support and co-operation for realising necessary savings across all parts of the business.”“We have been informed that the airline cannot run beyond two months and the management needs to cut costs through pay cuts and other means to ensure that it stays afloat beyond that. The airline did not inform us about all this all these years, which has dented the trust of the employees in the management,” said a senior executive.The airline has an annual salary bill of Rs30bn and the proposed salary cut is expected to reduce this expenditure by around Rs5bn.The employees were also informed that the salary cut will be for 24 months, with no scope for refunds.Meanwhile, sources claim that Jet Airways has already started firing people.“In the engineering department, the head of line for Delhi has been asked to leave. Job losses will start to happen in functions like cabin crew and ground handling,” an employee said.