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Last Updated : Aug 03, 2018 04:30 PM IST | Source: Moneycontrol.com

Jet Airways dives 7% after airline warns staff of ‘financial turbulence’

In a statement issued to the media, the airline has said that some of the cost cutting measures include sales and distribution, payroll and maintenance, among others.

 
 
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Jet Airways’ shares fell around 7 percent on Friday as investors turned wary of reports of a financial crunch in the airline.

The stock touched an intraday high of Rs 325 and an intraday low of Rs 301.25.

In a statement issued to the media, the airline has said that some of the cost cutting measures include sales and distribution, payroll and maintenance, among others.

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Jet said that the “airline management is in dialogue with key stakeholders to enlist their full support and cooperation for realising necessary savings.”

Earlier, reports had suggested that the private carrier has informed its staff that they will have to take up to cuts in their salaries as the cost of operations has increased due to rising crude oil prices and a falling rupee.

According to a report by Financial Express, Jet's top management has pitched for a nearly 15 percent cut in their pilot's salary and a reduction in the number of leaves to reduce employee cost.

The airline is meeting with their pilots in Delhi and Mumbai over two days for negotiating these terms.

Jet Airways CEO Vinay Dube, along with EVP flight operations and engineering Nikhil Vaid and chief people officer Rahul Taneja, will be addressing the pilots.

This will be followed by an open house to discuss the proposed salary cut with the representatives of the airline's pilot union, National Aviation Guild (NAG). The airlines has about 2,000 pilots and a workforce of 16,000.

The move is a part of airline's strategy to reduce employee cost as Jet Airways has not posted a profit for the past 11 years, barring FY16 and FY17, but its employee costs have been on the rise.

In FY18, the airline's employee cost stood at Rs 3174.22 crore, up from the Rs 3084.21 of FY17. In FY17 alone, employee costs shot up by a big margin of 21.79 percent from the Rs 2,532.33 employee expense in FY16, the report said.

The stock has fallen around 10 percent in the past one month. The stock ended at Rs 308, down Rs 23.20, or 7 percent, on the BSE.
First Published on Aug 3, 2018 09:40 am
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