Planning a trip to or from Goa in the next couple of days, and hoping to travel by your favourite carrier Jet Airways? Well, hold that thought. As per a report in the Economic Times, all Jet Airways flights have been grounded, pending a complete suspension of service. It turns out that the carrier has no cash to run operations any further – so you can also kiss you air miles goodbye.
A person in the know said that the news was sudden, and came without warning. Staff and crew have been left in the lurch, not knowing how to process the information. Since morning, Jet Airways has been operating only six of their aircrafts. In the last few days, only 35-40 flights, the bare minimum, have been operating. This spells bad news for potential investors who were undergoing a bidding process to invest in the airline. With the significant reduction of flights in the days leading up to today, Jet’s shares have already fallen almost 20% due to rumours of what seems like an imminent shutdown.
A senior official at the Directorate General of Civil Aviation said, “There is laid down regulation for each situation. We shall follow what is appropriate for a given one” revealing very little about the situation. Those in the know have reported that Jet Airways has tried desperately to raise funding through interim loans to keep operations running but to no avail. CEO Vinay Dube had approached the lenders with an appeal for Rs 400 crore, however, the banks refused to release any funds without additional collateral. The grounding of operations seemed inevitable, considering the once 124 plane operation was down to just 6 this morning.
The troubled history of Jet is no secret. It is India’s oldest surviving private airlines, having started in 1993 as an air taxi operator, and growing to become its biggest carrier with a premium international network. With stiff competition from the likes of Air Sahara, Kingfisher Airlines and several low fare carriers such as IndiGo and SpiceJet in the early to mid-2000s, Jet decided to expand even further – by buying Air Sahara in a deal that cost the company Rs 2050 crore. With additional costs and taxes, as well as legal and manpower issues spiralling out of control, the company sold a 24% stake to Etihad for $379 million in 2013.
The troubled Jet has defaulted on loans as well as vendor payments, grounding planes since the beginning of the year. To make matters worse, it hasn’t paid its employees since January. The top management has seen a pay cut up to 25%, and leasing companies have had payments defaulted on. An executive at Jet has said, “It’s an emotional day for us. We just want to focus on taking care of staff and guests.”