Jet Airways is immersed in a crisis that it is struggling to get out of. With Jet’s inability to repay debts, most of the aircrafts in the fleet are grounded and about 41 aircrafts are currently operating. The Directorate General of Civil Aviation has said on March 19 that the fleet is expecting a further downsizing.
New Delhi: With no control over the rising turbine fuel price and relentless competition in the market, Jet Airways is immersed in a crisis that it is struggling to get out of. Being a full service carrier, the cost structure for Jet is much higher than IndiGo and SpiceJet. In the past decade, Jet Airways has reported a profit three times. According to data published by the Bombay Stock Exchange, profits have been reported March 2017, 2016 and profit by a small margin in 2011.
Jet Airways owes lessors Rs.8414 crores and currently has a negative net worth of Rs.7242 crores. With banks and lessors losing patience with Jet’s inability to repay debts, most of the aircrafts in the fleet are grounded and about 41 aircrafts are currently operating. The Directorate General of Civil Aviation has said on March 19 that the fleet is expecting a further downsizing.
The gulf-based aircraft Etihad had made an investment in April, 2013 and the move was expected to increase operational efficiency and help reduce Jet’s debts considerably. Etihad has refused to help the cash-strapped airline which has led to a search for Indian suitors to save Jet from complete shut-down. Naresh Goyal, chairman of Jet Airways, was asked by Etihad to play a less important role in the restructuring scheme and insisted on capping his stake in the cash-strapped airline at 24%.
150 senior commanders and 110 commanders and co-pilots have opted to join SpiceJet. This incident came to light on March 18 during the open interview sessions being held by SpiceJet in Mumbai. The Jet Airways pilots’ association had also threatened to completely stop flying from April 1 unless they were given a clarity by March 31.
Also read: As Jet Airways hits financial air pocket, 260 pilots take parachute to SpiceJet
Jet Airways and SpiceJet have both had to ground Boeing 737 max aircrafts after the Ethiopian Airline and Lion Air crash both involving this particular type of aircraft.
Pilots have been calling in sick, miffed about unpaid salaries. Due to the severe cash crunch, Jet has been defaulting on salaries for senior management, pilots and engineers since August, 2018. In a report published by Indo Asian News Service (IANS) pilots are being poached from Jet by offering them stable jobs and lucrative pay.
With the State Bank of India at the helm, Jet’s lenders had asked Naresh Goyal to step down despite him having asked for more time from the staff members.
Also read: Cash-strapped Jet Airways cancels flights as pilots call in ‘sick’ amid salary defaults
Goyal had also written to Etihad and stated that the situation at Jet could become ‘deleterious’ without at least Rs.750 crores from Etihad. The restructuring plan with State Bank of India has also fallen through and banks have been unable to find a strategic partner.
Lenders are hesitant to take Jet Airways to bankruptcy court and are keen to save the airline as there are 16,000 jobs at stake. Naresh Goyal and his wife Anita Goyal have stepped down from the Board of Directors on Monday. Chief executive Vinay Dube, on the other hand, is likely to stay back. Goyal has decided to step down after a meeting with Tony Douglas, Chief Executive Officer of Etihad Airways.
Also read: Jet Airways financial mess claims founder’s job: Naresh Goyal steps down on Monday
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