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* Maps out three-year restructuring plan
* Expects return to profit in FY 2017
* Names new CEO from Air Seychelles, fourth in a year
* Shares suffer worst session in a year
* Abu Dhabi's Etihad owns 24 percent stake (Adds company, analyst comment)
By Devidutta Tripathy
NEW DELHI, May 27 (Reuters) - Jet Airways Ltd laid out a three-year restructuring plan on Tuesday vowing to take tough measures to return India's No. 2 airline by market share to profit after posting its worst ever loss.
All but one of India's big airlines loses money, with high costs, low fares and heavy competition which is likely to increase with two new carriers set to enter the market this year.
Kingfisher Airlines, once the No.2 player, grounded its fleet in 2012 for want of cash.
Jet Airways, which has not reported an annual profit since 2007, reported its biggest-ever consolidated annual loss of 41.3 billion rupees ($700 million) for the year to March.
For the quarter, its standalone net loss was 21.54 billion rupees, its worst-ever, and its fifth straight quarter in the red.
"These numbers should serve as a wake-up call," said Kapil Kaul, chief executive for South Asia at aviation consultancy Centre for Asia Pacific Aviation.
"The turnaround is going to take longer than expected and my assessment is it will be painful."
Shares in Jet closed 8.7 percent lower in their biggest single-day drop in a year.
Jet expects its operations to stabilise and return to profit by around the middle of the fiscal year which ends in March 2017, said Ravichandran Narayan, vice-president of finance.
Jet, which sold a 24 percent stake to Abu Dhabi's Etihad last year for about $380 million, has no plan for now to raise more equity and most of its future fund-raising would be in debt, Narayan told analysts on a conference call.
The airline plans to bolster revenue through code-share arrangements and ancillary services such as fees charged for seat selection and upgrades.
It is looking to cut costs and boost efficiency in every operating unit, Raj Sivakumar, senior vice president of alliances and planning, said on the call.
Jet will reconfigure its Boeing 737 fleet and will add seats in wide-body Boeing 777 planes, it said. It is also looking to sell three Airbus A330 planes that are currently leased out.
The carrier is cleaning up its balance sheet and writing down some "overvalued" assets, it said. It had debt of about $1.8 billion and cash and equivalents of $201 million at the end of March.
Jet, without a permanent chief executive since January, on Tuesday named Cramer Ball, an Australian who previously headed Air Seychelles, as CEO, pending regulatory approvals. He would be Jet's fourth CEO in a year.
Etihad's investment in Jet last year was the first by a foreign airline after India allowed overseas carriers to buy stakes in local airlines.
"We are a long-term strategic investor and committed to supporting Jet Airways as it re-engineers its business to achieve sustainable profitability," Etihad CEO James Hogan said in Jet's results statement on Tuesday.
Smaller rival SpiceJet also recently reported a record annual loss and said it was in advanced talks with a potential investor to sell a stake.
$1 = 59.0250 Indian Rupees Editing by Tony Munroe and Jason Neely