Group No.

– 2
Nityam Dhir
Roll No. – 16
A0102218100

SUMMARY OF JET AIRWAYS

The story of Jet Airways illustrates challenges faced by oldest aircraft company in India. In
media there is roaring of Jet airways operations being shut down and cancelling of the flights.
The huge delinquent situation of today can be traced back in a sequence of events. The problems
started when it disembarked on an international expansion plan and ordered 22 wide-body
aircraft for delivery over about 18 months in 2006. With frugal cash the order was given ad the
troubles began.

Later Jet bought another Indian airline Sahara for 14.5 billion rupees in 2007.

In 2013, Jet was near to out of cash, but survived this collapse when Etihad Airways of Abu
Dhabi's bought 24 percent stake. As part of the deal, Etihad also bought three pairs of landing
slots of Jet's at London's Heathrow airport and 51% stake in its frequent flyer program.
In order to compete with opponents with low-cost carriers, Jet lowered prices without reducing
expenses. High fuel prices, huge taxes compounded the problem.

One of the important event occurred around Diwali in 2018. Because of the losses happening in
the Jet airways, NareshGoyal the owner of company went to seek advice of Mr. Deepak Parekh
at his residence in Mumbai in an endeavor to save perishing of Jet. Mr. Parekh is the Chairman
of Housing Development Finance Corporation, which is India's leading housing finance
company. In the meantime the Tatas were considering the possibility of buying Jet Airway’s the
drowning ship.Mr. Parekh advised Goyal to step back and let new investors to come up. At that
time a private equity consortium was led by TPG CapitalPartners LLC who are specialist in
aviation sector.
But Goyal refused this advice and thought he will sail the ship alone, but as the time speaks
aloud, he could not succeed and Tatas went out of the deal.
In the meanwhile other stake holders felt distrusted and humiliated because of Goyal’s behavior.
One of these shareholders is ShukorYusof,who is founder of Malaysia’s research firm Endau
Analytics. According to him Goyal never took responsibility for his mistakes. He found it hard to
step down which worsened the situation. In fact he had a golden opportunity from Tata Sons
which he wasted. Till January 2019, Jet was flying but after this it started falling down.
The news started running in media:
“The Shares of Jet Airways were locked in 5% lower circuit at Rs 59.70 for the fourth straight
day after media reported that the government has ordered Serious Fraud Investigation Office
(SFIO) probe against the grounded airline and its group”
“Jet Airways audit shows diversion of funds, fraudulent billing”

“Misappropriation of funds relating to provision of loans and fraudulent billing for JP Miles”
And so on…..
In January 2019, Jet Airways and its business partner State Bank of India, met with other
shareholders or lessors to reassure them that they had plan to salvage the company who was
already in debt. Although it did not work. In this meeting Goyal banged his fist on a table and it
shook the faith of lessors who had come there to attend the meeting from Mumbai, Singapore,
Dublin and Dubai. A wrong message waved from this meeting.

The emotions of Goyal, debt and frauds in finances further strained the relationship between
company and lessors and they pulled their planes from the airline. The lessors like Aircastle,
Avolon, SMBC Aviation Capital, and Mitsubishi Corp have deregistered their 18 planes. It has
aggravated the problem.

This step led Jet which is 26 years old company to cancel hundreds of flights. At present the
company has to pay more than $1.2 billion as debt, and owes money to banks, pilots and
suppliers. With declining revenues, it is difficult to run on.
The 26-year-old airline had eight losses in the past 10 years and its share of the domestic
passenger market has gone down to nearly 15.5% in 2018 which was 22.5% in 2015. This has
tarnished market value of the company.

In 1993, NareshGoyal and his wife Anita started Jet Airways and at that time its only opponent
was Air India. But now Vistara, IndiGo and SpiceJet Ltd are dominating as low-cost carrier
planes in the domestic aviation market with over 1,000 planes. Tata Sons are giving a tough
competition.
Friction with lesser stake holders in company and the low-cost Indian competitors like Indigo,
are latest major setbacks for Jet Airways.

When Kingfisher was closed many people lost their jobs and lessors lost millions. No investor
will like to take risk. Presently lessors have declared that they will think about doing business
after scrutinizing new investor in Jet airways.
REFERENCES

1. https://m.economictimes.com/industry/transportation/airlines-/-aviation/jet-airways-audit-
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10th-straight-session/articleshow/70239439.cms
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