Jet Airways Board Audit Committee Does Not Approve Financial Results
In a surprising twist to the financial troubles at Jet Airways (India) Ltd., the airline has not released its financial earnings for the quarter ended June 30 today. Though the company’s board of directors met today for just that purpose it “deferred the matter of consideration of the unaudited financial results for the quarter”, said a statement by the company.
Worse still, the statement disclosed that the Jet Airways board’s audit committee had refused to approve the financial results “pending closure of certain matters”.
This is the full text of the Jet Airways’ statement.
This is to inform that the board of directors of the company, at its meeting held today, deferred the matter of consideration of the unaudited financial results for the quarter . ended 30 June, 2018. It may be noted that the Audit Committee did not recommend the said financial results to the board for its approval, pending closure of certain matters. The trading window will continue to remain closed and will open 48 hours after publication of results for the quarter ended 30 June, 2018. The meeting commenced at 5:45 pm and concluded at 9:00 pm.
The audit committee at Jet Airways board consists of
- Srinivasan Vishvanathan - Independent Director (former managing director at State Bank of India)
- Vikram Mehta - Independent Director (former chairman at Shell India)
- Ashok Chawla - Independent Director (former bureaucrat and currently chairman at National Stock Exchange)
- Harsh Mohan - Director (currently Chief-Group Support Services Officer for the Etihad Aviation Group)
The U.A.E. - based Etihad Airways owns a 24 percent stake in Jet. Founder Naresh Goyal owns 51 percent and serves as chairman of the board that includes six other directors. They are Anita Goyal, Gaurang Shetty, Rajshree Pathy, Ranjan Mathai, Nasim Zaidi, Kevin Knight.
On Aug. 3 Jet informed stock exchanges that “ due to certain exigencies” it was moving the board meeting, to consider financial results, ahead by a day - to Aug 9 instead of the earlier intimated Aug 10.
India’s second-largest airline is facing a cash crunch. Aviation fuel in India is the most expensive in Asia due to higher taxes. Rising global crude prices have only made it costlier. That coupled with a weakening rupee and cheaper ticket prices in a highly competitive market have led to erosion of profit margin for Indian airlines. Even the country’s biggest airline, IndiGo, wasn’t immune from these factors, reporting its worst profit in the quarter ended June.
Jet Airways is expected to report a second straight quarterly loss in June, according to BloombergQuint estimates compiled from brokerage reports.
Last week, Economic Times reported citing unnamed people that the airline has told its employees that it cannot operate for more than 60 days without trimming expenses, including their salaries. In an exchange filing it admitted resorting to cost cuts, however, termed the report “incorrect”.
Jet Airways is also the least preferred aviation stock among investors, with its shares falling more than 60 percent in 2018. Recently, HSBC had slashed its target price citing a “very tight” liquidity position and a “highly stretched” balance sheet.
Earlier today, Chairman Naresh Goyal apologised to investors who were impacted from the airline's share plummeting. “Lots of shareholders have lost money, I feel guilty and embarrassed,” Goyal said. He added that Jet Airways would set up a new committee led by directors Naseem Zaidi and Ashok Chawla to quell negative publicity and correct perceptions about the firm amid concerns over its financial health and the proposed salary cuts.
The stock has declined 12 percent since July. It closed 2.57 percent higher today ahead of the earnings that were deferred.