Jet Airways, started 25 years ago by Naresh Goyal, is coming to an end as all operations have been stalled by the management after all the major banks and plane lessors rejected their funding request. Jet Airways reportedly is more than $1 Billion in debt to the banks, funders, and lessors and has been experiencing a hit for a long time with huge losses incurred in the last four consecutive quarters.
A worried Naresh Goyal commented on Wednesday about how the company is forced to stall all their operations from that day itself, canceling all their domestic and international flights. The Amritsar-Delhi flight was it’s last before completely stopping its operations. Jet Airways, which had 124 planes in December, last year was left with just 5 planes after the first quarter of the year.
Under a debt settlement agreement with the airline’s board on March 25, Naresh Goyal agreed to bring down his stake to 25% and resigned from the board to hand over the control to the lenders. However, an April 2 order from the Supreme Court of India quashed all their hopes with all the control now going in the hands of the State Bank of India. With the banks and lenders rejecting more funding, Jet did not have money to buy fuel and maintain its operations. Thus, it had to stop everything immediately. Jet is calling it a temporary grounding of its operations until they find more funders. However, this decision has put Jet’s employers in jeopardy as the management themselves do not know what the next step is. Jet had already been on the back-foot on paying salaries to some of their employees, including pilots and engineers, from January.
Jet is banking on getting good bids from potential buyers soon to come up with a viable solution for themselves and its employees. It has had an expression of interest from a few bidders from around the world. Four of them are likely to be the eventual buyers, namely, Etihad Airways, TPG Capital, Indigo Partners, and national investment fund NIIF. However, the sale would take some time and Jet will have to come up with a solution to pay off its debts to the customers.
The Ministry of Civil Aviation is looking into the matter to make sure the situation follows the regulatory framework. The ministry wants to ensure that Jet follows all the policies of refunds, cancellations, and alternate bookings to minimize the trouble to the customers.
The biggest repercussion to this situation is the increase in the flight prices, especially in the Indian summer when the prices rise anyway. Jet’s loss has favored Spicejet and Indigo who have responded by taking most of its slots at all the major airports. Interesting and worrying times lie ahead in the Indian aviation industry with the fall of one of its biggest players.