Kuala Lumpur: India’s biggest airline by market value, Jet Airways (India) Ltd slumped the most in five months in Mumbai after it announced plans to further cut capacity amid declining travel demand.
The carrier plunged 13% to Rs307.35 on the Bombay Stock Exchange, slashing gains for the year to 51%. India’s benchmark index lost 2.9%.
Jet expects to reduce capacity by 10% on top of the 30% it has already eliminated, chairman Naresh Goyal said in Kuala Lumpur. Singapore Airlines Ltd, Qantas Airways Ltd and other Asia-Pacific carriers have slashed routes and cut capacity as the global recession pummels air travel demand.
“You may be able to cut down costs by reducing the capacity,” said Jayesh Shroff, who helps manage $6 billion (Rs28,440 crore) of assets at SBI Asset Management Co. in Mumbai. “But if you want to make profits, you need to fly more passengers. That is the game.”
The airline carried 2.54 million passengers in the quarter ended March, 20% fewer than a year earlier. The carrier will add more capacity to West Asia due to increasing traffic, Goyal said. Jet Airways expects to break even this year because of the cost cuts, Goyal said.
The carrier has no plan now to raise funds, he added. The airline was earlier planning to raise as much as $400 million.
Airline losses worldwide may total $9 billion this year, nearly double a previous forecast, according to the International Air Transport Association.