On Wednesday night Jet Airways flew it last flight 9W2502 from Amritsar to Mumbai. After lenders declined to hand out emergency funds, bringing the curtains down on this era in which it broke into a state monopoly sector to become India’s largest private airline at one point.
On Wednesday statement Jet Airways was informed by the State Bank of India on behalf of the consortium of India lenders, that they are unable to consider its request for critical interim funding. Since there are no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operation going. The airline had already halted international flight. It operated about 40 flights using five aircraft on Tuesday and Wednesday.
“History and Business dynamics proves that once an airline shuts down in India, it never does restart,” Said Mark D. Martin founder of aviation consultancy martin Consulting LIc. “We were given to understand by SBI terms that they do all the possible with ensuring Jet Airways does not shut down and to think that no money was pumped in to resolve liabilities such as lessor outstanding, fuellers and salaries is unforgiving.”
Martin said that “With no aircraft, pilots, flight attendants and engineers, I certainly don’t see how any bidder will continue to see value in Jet Airways.”
Two senior said that Mint that the lenders to the Airline had rejected its request for emergency funds as they were unsure if the funds pumped into the airline could be recovered later. They said that they have neither declined or accepted Jet Airways request for funding. They only want some assurance that this money that we give will not go down the drain and can be recovered at a later stage.
“Whatever money we give, we would want get it back and that assurance is not visible. Things will be clear once we are able to move ahead with the planned resolution process” They said.
The Interim emergency funding of Rs. 400 crore sought by Jet Airways was supposed to help the airline keep at least some of its planes flying till the lenders found a buyer.
The second Banker said that “We are not going to give emergency funding until we have a clear visibility of their cash flow. A large portion of the current revenue of the airline is being used to settle pending dues , IATA (International Air Transport Association ) and credit card charges, etc”
“There is no point of additional funding at this Monet, since valuation of the airline will not change during the biding process. Even if the services are grounded completely, the bidding process will not change,” the Banker said. “As lenders, we have to see whether we will get back our money and in this case, we are not sure.”
After the Board meeting the company said that “The company’s leadership in consultation with the board of directors, is engaged with the lenders in connection with , they said emergency funding request to arrest a further deterioration of its services and minimize inconvenience to its guests.”
Jet Airways has deferred interest payments to banks and due to fuel suppliers, oil marketing companies and aircraft lessors. As a result, lessors of the airline have grounded most of its 119 aircraft.
The company was also held back salaries since January to a section of its employees, including pilots, engineers and general managers. In addition, the carrier has deferred march salaries to all its employees, as it continue to battle financial woes. In the last few months, about 250 pilots have left the airline, while 23 more resigned on Tuesday, leaving their strength in the airline at about 1,300.
History About Jet Airways
Jet Airways is an Indian International airline based in Mumbai. It was founded in 1 April 1992 and it takes it first flight on 5 May 1993. The parent company of Jet airways are SBI led-bank Consortium which is having 51% shares, Naresh Goyal with 24% shares, Etihad Airways with 12% shares and public shares of 13%. Naresh Goyal was the founder and former chairman of Jet Airways and Vinay Dube was CEO.
In October 2017, It was the second-largest airline in India after Indigo with a 17.8% passenger market shares. It operated flights into 52 destination from its main hub Chhatrapati Shivaji International Airport and secondary hub Indira Gandhi International Airport and Kempegowda International Airport. It began full-fledged operation in 1995 with international flights added in 2004. The airline went public in 2005 an in 2007 it acquired Air Sahara. It become the largest carrier by passenger market share in the company by 2010, a position it held until 2012. In its first financial year, jet airways served 12 destination in India and carried 663,000 passengers and had a 6.6% market share. The airline had a fleet of four Boeing 737-300 aircraft leased from Ansett Worldwide, making it the first operator of the type in the country. By the next year it was India’s second largest private airline having, having carried 1.7 million passengers in 1994. The leet grew to seven aircraft, including three Boeing 737-400 aircraft leased from Malaysian Airlines. On 12 May 1994, all of Jet Airway’s shares were transferred to tailwinds International, Whose equality capital was held by Naresh Goyal (60%), Gulf Air(20%), Kuwait Airways (20%).
At the Paris Air show in June 1999, Jet Airways announced an order worth approximately $550 million for ten Boeing 737-800 aircraft. The airline Purchased its first Boeing 737-400 simulator from CAE Inc. in 2001. By April 2001, the airline flight has grown to 30 aircraft and was operating over 195 flights daily to 37 destinations within India. The airline launched its first international flight in March 2004 from Chennai to Colombo.