Jet continues to burn cash; FDI cap the culprit?
There’s more bad news for prospective foreign investors in the Indian civil aviation sector as airlines major Jet Airways has reported a net loss of Rs.1,813.7 crore (standalone) for FY2015. This, despite a big fall in its fuel expense. The full year results that were released on Friday show that despite the carrier’s fuel expenses falling to just 34.2% of its sales – the lowest since FY2010 – losses continue to mount. While some might take heart from the fact that its FY2015 loss is a huge improvement from the Rs.3.667.9 crore loss the company had incurred in FY2014, its shares plunging by over 6% on Monday indicate that investors are tired of seeing the glass half full. 
It’s worth noting that in 2013, the UAE-based Etihad Airways had picked up 24% stake in Jet Airways, which had helped the ailing airlines cut down its debt in a significant way. But with the airlines continuing to report losses even in the first full year after its deal with Etihad, which has provided it with enhanced global connectivity, despite a big drop in fuel expenses, has raised serious doubts over the future of the Indian civil aviation sector. Jet Airways’ FY2015 losses might also dampen the mood of prospective investors in the IPO of Indigo Airlines, which is expected next month. It’s also worth noting that the Indian government allows FDI in the civil aviation sector only up to 49%, but such continuous streak of losses by several Indian airlines operators begs the question if foreign investors are even interested if the government fully opened up the sector for them.
June 01, 2015 | 7:19 pm IST.
to success.