jet airways (Turnaround Strategy of Jet Airways) strategic

managementPresentation Transcript
1. Turnaround Strategy Jet Airways By: Purva Kini 3038
2. Restructuring strategy to convert, change or transform a loss making company into profit making
company Reversing the position from loss to profit, from declining sales to increasing sales, from
weakness to strength and instability to stability
3. Jet Airways is an airline based in Mumbai, India. It is India's third largest airline. Jet Airways also
operates two low-cost airlines, namely Jetlite (formerly Air Sahara) and Jet Airways Konnect. Jet
Airways was incorporated as an air taxi operator on 1 April 1992. It started Indian commercial airline
operations on 5 May 1993 with a fleet of four leased aircraft. It began international operations to Sri
Lanka in March 2004.
4. Service line of Jet Airways In Flight services First class, Premiere Class,
Economy class On Ground servicesCheck in options SMS check in, tele check in, web check in,
check in while walk in. Convenience and SafetyTowels, Pillows, Blankets, Reading Material, First
Aid, Smoke detector, Bassinets, Child care, Life jackets & seat cushion. Entertainment- jet screen,
Movies, TV program, Music, in-flight communicator, online magazines etc. Jet Wings (in-flight
magazine), Jet Boutique.
5. Operates over 400 flights daily to 65 destinations. Agreements with 133 international airlines.
Agreements with 64 carriers for carriage of cargo to their destinations. Best Among the all Indian
Airlines.
6. International Market - British Airways & South West Airlines Domestic Market King fisher,
Indian Airlines, GoAir, Indigo,
7. Strengths of the company Experience exceeding 14 year Largest fleet size Customer
relationship and Punctuality Weakness Loosing domestic market share Old fleet. Scope for
improvement in in-flight service Weak brand promotion
8. Opportunities Untapped air cargo market Scope in international service and tourism
Threats Strong competitors Fuel price hike Overseas market competition
9. Customer Segment First Class, Premiere (Business) Class, Economic Class Target
Segments Premiere (Business) Class Business travelers, contribute 48% of passengers & 66%
of revenue, ready to pay higher prices, last time booking. Economy Class Leisure travelers,
Prefers low cost airlines, ready for transit if there is cost advantage, large %of passengers.
Customer Segmentation
10. Jet Airways has shown eight-fold jump in losses at Rs. 891 crore in Q2 2013 Reeling under
huge debt burden of 12,000 cr INR, Jet increased its current liabilities during first 2 quarters of 2013
as its short term borrowings increased from 1952 crore INR to 2480 crore INR this year Jet's trade
payables have increased for the first two quarters of this financial year by Rs 680 crore from Rs
4752 crore in last financial year to Rs 5432 crore for the half year ended September 30.
11. Jet has shown minimal growth in its revenues from Rs 4,137 crore in the corresponding quarter
of previous year to Rs 4,194 crore in Q2 of this financial year, an increase of just 1.4 per cent
whereas its expenses on jet fuel and aircraft lease rentals have all gone up significantly. Jet
Airways paid to oil companies Rs 1810 crore for the second quarter up from Rs 1681 crore for the
same quarter last year and it also paid more money to aircraft leasing companies increasing its
expenses by Rs 792 crore for the quarter when compared to the second quarter of FY12-13 Jet
Airways expects to conclude 334 million $ sale to Etihad by year-end
12. Jet Airways should discontinue loss making routes where airport charges have increased but
there is no increase in revenues from those routes Jet Airways should think of adding flights to
profit making routes like Gulf and ASEAN markets Jet Airways should sale/sale and leaseback
some of its aircrafts. Revised fare staff restructuring Effective marketing strategies & pull
customers Join global airlines alliance
13. Diverting part of its fleet based on the demand supply scenario Unique business model with
presence across segments Leasing out owned fleet to capitalize on the demand-supply mismatch.
Sell the old aircraft Presence in 75 countries therefore route sharing is also an option Network
expansion Termination of non-profitable routes Focus on International segment- key driver for
profitability Improving domestic business strong brand image increase its domestic capacity and
capture a greater share of the demand supply
14. Proposed Jet-Etihad deal will bring immediate revenue growth and cost synergy opportunities
for both the airlines and will help strengthen the balance sheet Key cost benefits and cost
synergies in fleet acquisition, maintenance, joint purchasing opportunities for fuel, spare parts,
equipment and catering supplies as well as external services such as insurance and technology
support will come through Other areas of co-operation will include joint training of pilots, cabin crew
and engineers
15. All this above will result in accelerated return to sustainable profitability. Jet announced that
they were ready to sell a 24% stake to Etihad at US$379 million Jet Airways plans to raise external
commercial debt worth $300 million to replace its existing high cost loans. The total debt is a little
over Rs 11,700 crore, of which Rs 7,300 crore is an aircraft acquisition loan. The rest is working
capital and other short-term debt. The airline will save around $30 million (Rs 183 crore) in reduced
interest outgo after the debt restructuring.
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16. Thank You