Jet Airways may cut up to 10% of its workforce as it grapples with a relentless rise in fuel costs and intense competition on key routes from low-fare rivals.

The management had conveyed the decision to senior members in a meeting in October. Though the target of up to 10% (or about 1,000 employees) was conveyed verbally, a letter sent a few days after the meeting (last week of October) asked all department heads to prepare for layoffsin their departments as per a report in ET by Manisha Singhal

A Jet Airways spokesperson, however, denied any such plans. "In view of the spiraling operational costs and increase in fuel prices, Jet Airways is continuously looking at several non-payroll areas at cutting costs. Jet Airways seeks to bring down costs further by adopting possible measures but without bringing down the workforce," the airline said in response to an email query.

The country's largest private carrier posted a loss of Rs 123 crore in the last quarter, its second successive loss after a hit of Rs 124.46 crore in the March quarter, and is facing an increasingly rough environment. Fuel costs have risen 47% in the past year and Jet has not been very successful in reducing its debt of Rs 13,000 crore.

Price cuts, especially from nimble rivals such as IndiGo, a high debt burden and the remorseless rise in fuel prices, are eroding airline margins and profitability. Private carriers, according to the Centre for Asia-Pacific Aviation, are expected to post a combined loss of $350-400 million for 2011-12.

Many airlines also have high employee costs, which hinder their progress in tough times, analysts say. Jet employs about 10,000 people and its employee cost rose to.`361 crore in the first quarter.