Jet Airways Crisis Deepens

My uncle usually travels by flight especially through Jet Airways. He extremely likes Jet Airways
two feature In Flight Entertainment System – “Jet-screen” other one is “Frequent Flyer
Programme” in which a member can earn Jet miles during travel that can be redeemed in future
booking of flights. When the last time we met I said to my uncle that Jet Airways is in big
financial trouble it has debt of over ₹8000 crore, it immediately needs ₹3500 crore to avoid
Insolvency process, my uncle was extremely shocked.

Jet Airways started by Naresh goyal 25 years ago in 1993 after 1991 liberalisation done
by Narasimha Rao led government. It become public company in 2005 and by 2010 Jet
Airways becomes Number one airline carrier of India replacing state run Air India. It
has 119 planes but now it reduced to 26 only. Airline has not enough operating money
to run its business. Recently 400 Jet employees hold a silent protest march at Indira
Gandhi International Airport in New Delhi against non payment of salary.

This is not the first time Jet Airways faces financial trouble, in 2013 the carrier had
₹16,600 crore of debt which came to at moderate level when UAE based airline Etihad Airways
purchased 24 percent of its stake. It was the first such investment by a foreign airline since
Government relaxes the FDI norms in 2012, permitting overseas partner to invest up to 49% in
the country airline. Reasons of Jet Airways crisis:

 Since India is price sensitive market, after the entry of Indigo and Spicejet
which provides low cost flight fare, Jet Airways facing huge competition.
 Economic Slowdown of 2008 airline had hard time to run its business as
we saw Vijay Mallya led Kingfisher Airline became bankrupt in 2012.
 Sharp increase in global oil price during 2009-2013 that leads to
consequent increase in Price of Aviation Turbine Fuel (ATF).
 Jet Airways has higher per Km expense of ₹3.17 whereas Indigo and SpiceJet
has per km expense of ₹2.04 and ₹2.53 respectively. Jet had lowered the prices
without reducing its expensive services.
 Loss of investor trust as Jet Share price on Jan 2018 is around 900 per
share currently April 2019 traded at 250.

In recent development on 24th March 2019 Founder and Chairman of Jet Airways
Naresh goyal along with his wife Anita Goyal has stepped down from their position in
the board. Naresh Goyal stake will be cut to 25.5 percent from current 51 percent.
According to this resolution plan Etihad Airways stake will also be halved to 12 percent
that make room for bank to take controlling stake of 50.5 percent in the airline. The
Government also asked consortium of bank led by SBI to rescue Jet without pushing it
into bankruptcy, to avert thousands of job losses before general election. India’s
aviation sector has cut-throat competition and it is survival of the fittest.

Ravi Raj (Reg No- 18425580470)