McKinsey and BCG to help Jet Airways cut costs and boost revenues

India;s second largest airline company Jet Airways has enlisted the services of global management consultancy McKinsey & Company to help contend with falling stock value. The airline has also called upon the Boston Consulting Group (BCG) to support with revenue generation strategies.

Jet airways has been struggling with diminishing revenues in recent times, and its stock value on the National Stock Exchange has fallen by nearly 2%. The dip in performance is the result of a wide range of issues, both in the operational domain as well as in its financial division.

As a result, the airline has had to delay salaries, ground eight planes and terminate the services of approximately 20 professionals at a managerial level. Despite disbursing salary payments one half at a time, the airline has had to delay payments and add 25% reductions to senior management salaries.

The business environment in India has been aware of its struggles, exemplified by the fact that the top lenders for the airline have been monitoring it for potential defaults.Moreover, India’s primary credit rating body has lowered the profile of the airline’s loan programme, while Jet Airways itself has entered talks to generate funds.

One strategy for doing this is the unloading of stocks from Jet Privilege in addition to the programme that it owns a share in at Etihad. Other partners such as Delta Airlines, Air France-KLM and Tata Sons are also being urged to offload their stocks in Jet

In order to help improve the situation, the airline has been forced to enlist the services of two global management consultancies, namely McKinsey & Company and BCG. The former is expected to support with cost cutting initiatives as the airline goes into damage control mode.

BCG, on the other hand, will help with developing strategies to regenerate its revenue streams. “As communicated earlier, Jet Airways is already engaged in implementing the various elements of its turnaround strategy. Such initiatives typically require inputs from external advisers/specialised consultants,” said a Jet spokesperson to the Economic Times.

Jet is the second Indian airline company to have enlisted the services of consulting firms in recent times. Last year, Air India brought on board Bog Four accounting and advisory firm EY to help turnaround its substantial debt levels.