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New Delhi, May 28: Naresh Goyal-owned Jet Airways is all set to reduce domestic capacity by 10% within a month. This will be over and above 20% capacity pruning the airline has done during November-May, to tackle slowdown in traffic and mounting losses. Jet's net loss touched Rs 961.4 crore in 2008-09.

However, the reduced capacity in domestic routes will be added to the international operations where the airline is making profit. So, some Boeing 737s deployed on the domestic side will be diverted to Gulf and southeast Asia. And, some 737s will be shifted to Jet's new low-cost brand, Konnect.

"In the reduced travel during this slowdown, the domestic aviation industry has 40% over-capacity. Ticket prices are about 30% below the cost recovery level. The industry as a whole has to remedy this situation but we are doing our bit. After cutting 20% domestic capacity from November to May, now we will go in for another 10% cut by June," said a senior official.

At present about 40 of the 50 Boeing 737s in Jet's fleet are used on domestic side. In an ongoing route rationalisation that saw smaller planes being deployed on routes as per actual loads, Boeing 737s are now used to service all international sectors except North America, Europe and Mumbai-Singapore. Now more of these planes would be used for international expansion.

"Our EBIDTA growth on international sector is 24% in Q4 of 2008-09, a figure that was negative on first two quarters of last fiscal and 12% in Q3. The improved result, though the overall condition is still challenging, is substantially due to international operations doing better. We are almost done with our international long-haul restructuring and there will be gradual expansion here," Jet CEO Wolfgang Prock-Schaeur said. Better showing on international front helped Jet post a profit of Rs 53 crore in Q4 of 2008-09.

The Jet-JetLite combine has a total fleet of 110 aircraft. In the past few months, it has leased out nine widebody planes to foreign carriers. Admitting that the situation remains critical for the industry as a whole, Jet expects to save $330 million through route restructuring and cost-cutting programmes like closing some overseas bases, laying off staffers, pruning salaries and fleet size. In addition, restructuring of payment schedules to financial institutions and service providers is going to lead to a cash release of $270 million. "So we have nearly $600 million of cost saving and cash release for this fiscal," the CEO said.