Jet Airways: A Story of Clipped Wings and Dreams

Jet Airways employees stage a protest over delay in their salaries at T-3 terminal of IGI Airport in New Delhi. (Photo: Atul Yadav - PTI)

Wepen, April 25, 2019: Kolkata too became a part of the Jet Airways protests that has been taking place throughout the nation in protest of the closure of the airline. A silent rally was taken out by the staff of Jet Airways in Kolkata.

“Save us from dying;” “Save 22000 staff and one lakh family members,” stated the placards in the the silent rally that was brought out at the Netaji Subash Chandra Bose International Airport, Kolkata on Wednesday.
“Please help us fly again and help restore our dignity. Please release funds. Give us a chance so that we can turn around the situation. Please consider us your brothers and sisters. We are perishing along with this our family members, vendors, business associates. Please restore our wings,” appealed Sudeshna Guha, Guest relation Supervisor, Jet Airways.
Incidentally cash strapped Jet Airways halted all  flight operations after  lenders rejected pleas for emergency funds, potentially bringing down curtains on what was once India’s largest private airline.

However banks had seen the writings on the wall with about a billion dollars to be paid back and did not show much interest and pro active approach. Thus the airline bided time.

Before defaulting on loan payment to banks on 31December the airline had made significant set of cut backs including unprofitable routes and had rejigged the network strategies along with other moves such as withdrawal of meals and lounges to passengers. It was quite clear that the airline did not have money.

Had the banks been proactive post 31 December 2018, they would perhaps had the opportunity to take over the airline’s ownership sooner than later. The bankers did not seek any aviation expert advice and instead tried to figure out the business all by themselves.

By the time the bankers came to the conclusion that they should convert their interest from debt to equity and take charge of the airline the goalpost had shifted. The aircrafts that Jet Airways had taken on lease were steadily being grounded on virtually daily basis due to nonpayment of dues thereby chipping away at the airline’s ability to offer a full network.

With a truncated network it now became almost impossible to offer schedules to suit customers thereby leading to further revenue loss. Had the airline been a private equity funded enterprise it could have got an infusion of much needed fresh funds at this critical hour and remained afloat, but the bankers refused any further commitments. “Maybe because of the Kingfisher Airlines experience where the banks had gone all in but the airlines finally collapsed, they decided to maintain a distance” feels a finance pundit.

After Naresh Goyal stepped down from the board of directors and Chairmanship the path was now clear for new potential investors. Earlier when the sale of the airline was first discussed Goyal’s stepping down from the board was a key demand of the suitors.

Unfortunately even after Goyal had stepped down the much need 1500 crore Rupees was not infused by the banks. Eventually the airline had to ground itself on April 17.

According to an expert in the aviation Sector even now in the bank led sales process which is supposed to end on May 10 there is no clear definition of what the bidders are expected to buy. It blandly says, “Identification of a suitable investor to acquire ownership of the company on as is where is basis and thereby affecting change in management and control of the company and for the settlement of the obligations of the company in relation to the Existing Facilities.”

The industry expert adds “Like one would expect, a term sheet for an equity transaction states how much of a percentage of equity of the company is being sold, but here door is wide open, stated to be in between 31.2 percent and 75 percent and the

“as is ” clause is also very worrisome because the banks have not worked and coordinated with the management to ensure that “as is” remains fixed.

Every day we have planes leaving the Jet Airways fleet to join other airlines. Not only that the  aviation ministry is also giving out the slots (right to operate a flight on a particular route at a particular time) to other airlines.”

Meanwhile it is learnt that all shortlisted bidders including Abu Dhabi based Etihad Airways have backed out of the process of buying the grounded Jet Airways. Etihad was the only bidder to have expressed interest to buy a controlling stake .The other short listed bidders were sovereign fund NIIF and private equity firm TPG Capital and Indigo Partners. As of now it has become quite apparent that since  there are no bidders left, there is little hope of Jet’s revival.