JET AIRWAYS

From the rising to the sinking…!!!

A report about the journey to JET AIRWAYS throughout, about the existence, all the jobs done,
what and how all went wrong, and finally the downfall.

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A brief about the case:

As a slew of budget carriers started flooding the market in the mid 2000s, offering no-frills, yet on-time
flights, Jet Airways began dropping fares, some to below cost. On top of that, provincial taxes of as much
as 30 per cent on jet fuel added to its expenses, while price-conscious Indian travelers refused to pay a
premium for on-board meals and entertainment. Unlike budget operators, full-service airlines such as Jet
Airways offer such amenities mostly for free. Jet Airways lost money in all but two of the past 11 years and
has Rs 72.99 billion ($1 billion) of net debt. While it didn’t separately disclose cash and cash equivalents
as of December 31, Bloomberg calculations show the airline had about Rs 3.55 billion of cash at the end of
last year. It defaulted on loans that were due by December 31 and has delayed payments to staff and lessors.

A group of lenders led by State Bank of India has proposed taking a 50.1 per cent stake for Re 1 through
the issuance of 114 million new shares, a maneuver that is allowed under a framework outlined by the
Reserve Bank of India last year. The procedure, applicable for companies with a negative net worth, is
called Bank-led provisional resolution plan, or BLPRP, and it needs to be approved by all lenders, a banking
industry group, founder Goyal and the board of Etihad. The structure, however, is expected to be temporary,
allowing the airline to raise equity from investors, which in in turn would alter the shareholding pattern. Jet
Airways, which requires some Rs 85 billion to get back on its feet, now needs to bridge that gap through
fresh equity infusion, debt restructuring and asset disposals, such as selling aircraft and leasing them back.

Jet Airways management has given scant detail, but said lenders will also participate in an equity issuance
round beyond the already allotted 114 million shares. Jet Airways has held talks with Etihad and Indian
conglomerate Tata Group, while Goyal has offered to pump in as much as Rs 7 billion, if he retains his 25
per cent stake. Etihad may invest about Rs 14 billion and retain a stake below 25 per cent.

The airline business in India is notoriously difficult, with cut throat competition pushing base fares to as
low as 2 cents. Kingfisher Airlines, founded by beer tycoon Vijay Mallya, ended operations in 2012 after
failing to clear its dues to banks, staff, lessors and airports. SpiceJet Ltd. almost collapsed two years later
before its founders returned to gain control and revive the company. State-run Air India Ltd. is surviving
on bailouts worth billions of dollars. Apart from Etihad, Singapore Airlines Ltd. and AirAsia Bhd. have
also set up local ventures, but they are all loss-making.

Who is the JET AIRWAYS?

Founded in -- 1 April 1992
In services since -- 5 May 1993
Parent company--
  SBI led-Bank Consortium (51%)
 Naresh Goyal (24%) - Founder & Former Chairman
 Etihad Airways (12%)
 Public Shares (13%)
Jet Airways (India) Ltd. is an Indian international airline based in Mumbai. As of October 2017, it was the
second-largest airline in India after IndiGo, with a 17.8% passenger market share.

The airline's head office is located at Siroya Center in Andheri, Mumbai. The head office was previously
located at S. M. Center.

The airline was granted a scheduled airline status on 14 January 1995. It entered into a marketing agreement
with KLM the same year. In 1996, the airline placed a $375 million order for four 737-400 and six 737-800
aircraft from Boeing, which were delivered between 1997 and 2000. Jet Airways was the first airline in
Southeast Asia to order the 737-800. In the financial year 1996–97, the airline carried 2.4 million passengers
and had a market share of 20 percent, second highest after state-owned Indian Airlines.

Growth & Expansion of JET AIRWAYS:

 In January 2006, Jet Airways announced its intention to acquire Air Sahara for US$500 million in
an all-cash deal; however, the deal fell through in June 2006. On 12 April 2007, the deal was back
on track with Jet Airways agreeing to pay 14.5 billion (US$210 million). On 16 April 2007, Air
Sahara was renamed as JetLite and was marketed between a low-cost carrier and a full service
airline. JetLite became a wholly owned subsidiary of Jet Airways. In August 2008, Jet Airways
announced its plans to integrate JetLite into Jet Airways. In October 2008, Jet Airways laid off
1,900 of its employees, who were later re-instated due to intervention from the Ministry of Civil
Aviation.
 In October 2008, Jet Airways entered into an alliance with rival Kingfisher Airlines for code-
sharing on domestic and international flights, collaboration on frequent-flyer program and sharing
crew and ground handling equipment.
 On 8 May 2009, Jet Airways launched another low-cost brand, Jet Konnect, It operated a fleet of
Boeing 737 Next Generation and ATR 72 aircraft and operated on profitable short-haul routes with
higher passenger load factors.

Strengths of Jet Airways

 Jet Airways is one of India’s largest full-service carriers.

 At first Jet Airways flew domestic services , however inside 10 years extended internationally with
flights to goals in the Indian sub-landmass, and – in 2005 – London Heathrow, in competition with
Air India, British Airways and Virgin Atlantic.
 It was highly respected for inflight administration and reliable quality, particularly contrasted and
the state- owned carriers.
 Jet Airways has kept on developing, building traveler numbers – which have nearly doubled in 10
years – and yet its obligations developed.
 Jet airline has aimed to distinguish itself from other low cost airlines in the US by offering a greater
range of in flight amenities. So, for example, when we take JetBlue flights, we can enjoy a wide
range of in flight entertainment options, including Sirus SM satellite radio services. This is in
accordance with their airline's stated aim to 'bring humanity back to air travel. The
baggage options are very convenient too. For example, if we are flying Economy, we will be able
to take two free bags into the hold, and two items of hand luggage on board in the cabin.
  Jet airways is comfortable and enjoyable but that will also fit in with the tight budget, then we are
sure that this airline will have plenty to offer.
 Throughout the year, there are plenty of cut price offers crop up on Jet airways tickets too.
 While Jet Airways doesn’t have a cutting edge business class product, the direct aisle access on
their wide bodies does beat some of Air India’s tight seating configurations.
 On the pricing front, Jet airways is working pretty aggressively on this flight for the moment. While
flights to the UK from India could cost anywhere in the vicinity of INR 40000 upwards for economy
and INR 1.25 Lakhs upwards for Business class, here are some sweet deals on these newly launched
flights.

The Start of crisis:

 As of November 2018, Jet Airways has been reported to have a negative financial outlook
due to increasing losses.
 In March 2019 it was reported that nearly a fourth of Jet Airways' aircraft were grounded
due to unpaid lease rates.
 On 25 March 2019, Mr. Naresh Goyal and his wife Anitha Goyal stepped down from the
board of directors.

 On 5 April, Indian Oil Corporation stopped supplying fuel to the airline, citing non-
payment of dues as the emergency funds have still not been credited.

 On 12 April 2019, Jet Airways announced the suspension of all eastern-India-bound and
all international flights due to a lack of available aircraft.

 On April 17, the airline has suspended all flight operations, due to lenders rejecting Rs 4
billion of emergency funding and its membership in the International Air Transport
Association (IATA) was suspended.

 On 17 June, after getting no acceptable offers from Etihad Airways and Hinduja Group,
lenders to Jet Airways decided to refer the company to National Company Law Tribunal
(NCLT) for bankruptcy proceedings with debt of $1.2 billion.

 As of 11 July 2019, according to Civil Aviation Minister Hardeep Singh Puri, a total of
209 slots vacated by the airline were lying unused at 31 airports.

The Downfall of Jet Airways (When & What)

 March 2018

Jet Airways reports a loss of Rs 1036 crore in the Jan-March quarter as revenue declines and costs increase
significantly. The company defers the March salaries of some employees citing “circumstances beyond its
control.”
  April 2018

Bows out of bidding for Air India citing the complex process.

 May 2018

The government refuses to approve Jet’s merger with its subsidiary JetLite, nearly three years after the
proposal was made.

 June 2018

Jet announces new check-in baggage norms. The 15kg of free check-in luggage for economy class will
have to be in one bag. Business class passengers can carry 30kg in two bags.

 August 2018

1. It considered a 25% pay cut for employees.

2. Indefinitely defers announcement of financial results for the April-June quarter of financial year
2019.
3. On Aug. 12, the Directorate General of Civil Aviation announces an audit to assess Jet’s financial
health. State Bank of India asks the firm to provide enough collateral for emergency funding.
4. On Aug. 27, the company announces losses of Rs 1323 crore for the April-June 2018 period.

 September 2018

1. On Sep.19, the income-tax department conducts surveys in the company’s Mumbai and Delhi
offices 968 over allegations of financial misappropriation.
2. The next day (Sep. 20), around 30 passengers on a Jet Airways flight from Mumbai to Jaipur suffer
nose and ear bleeding after the cabin crew forgets to activate the internal pressure control. India’s
civil aviation minister Suresh Prabhu orders a safety audit of all airlines and airports.

Things That Went Wrong For Jet Airways

 Costly purchase
Many aviation experts believe the start of Jet's financial troubles can be traced back to the 2006 purchase
of Air Sahara for $500 million in cash. Founder Naresh Goyal reportedly ignored the advice of
professional associates who said he was paying too much. Market reaction to the deal was also decidedly
mixed. The budget carrier was rebranded "JetLite" but it haemorrhaged money and in 2015, Jet wrote off
its entire investment.

 Budget airlines
India's aviation sector is fiercely competitive and Jet has taken a battering from a number of hugely
successful low-cost airlines, including IndiGo, SpiceJet and GoAir. Experts said the people running Jet
failed to take the trio seriously when they were founded between 2005 and 2006, offering cut-price fares
and previously unserved routes. "They were essentially assumed to be fringe players by the Jet
management," industry analyst Amrit Pandurangi told AFP. "Jet always catered to corporates and failed
to recognise that low-cost carriers were attracting customers who were price sensitive.
 Poor management
Experts put a lot of the blame on Goyal's management style. They say his decision to have a single
management team, headed by himself, running all Jet's operations was a crucial mistake. Analysts say he
should have had one team running the full-service carrier and another running the budget flyer. "Jet
lacked a concrete business model and fiddled with it often, which confused investors, (and) passengers
alike," said Agarwal, who believes the company's decisions lacked transparency. Goyal has also been
accused of making bad investments and failing to address the company's deteriorating financial
predicament while borrowing heavily.
 Fluctuating crude
All of India's carriers are particularly sensitive to fluctuations in global crude prices because the Asian
giant is a major importer of oil. When the rupee is weak, which it has often been over the past year or so,
fuel -- the biggest cost burden for airlines -- becomes more expensive. Soaring oil costs and the Indian
rupee hitting record lows last year affected all Indian carriers. IndiGo and SpiceJet reported massive
losses but analysts say their books were resilient enough to weather the quarterly losses. Jet's, however,
were saddled with debts. "Jet Airways failed to manage its balance sheets and was caught out by these
cyclical changes in the industry.
5
 Failure to attract investors
Aviation analysts say Goyal's failure to find a strategic investor to pump money into Jet extended the
airline's losses, contributing to the financial predicament it finds itself in today. Talks at the end of last
year with tea-to-steel conglomerate Tata failed to go anywhere, while Etihad Airways reportedly refused
to increase its stake because Goyal was at the helm. The 69-year-old was forced to give up control of Jet
last month as part of a debt resolution deal that saw a consortium of lenders led by the State Bank of India
take over the airline. It is now up to them to find a buyer.
Conclusion
At the end the final conclusion is that the jet airways have to focus on their major dissatisfaction points
that are:
 Poor management
 Price fluctuation
 Costly purchase
 Scarcity of natural resources (fuel)
 Less salary than other airlines

1. The success of an organization depends on its ability to affect continuous improvement and
provide quality products and services to its customers but the organization don't focus on that.
2. This will require every person in the organization to possess the requisite knowledge, skills and
attitude that how they have to deal with problems, training requirements, two levels of
supervision could be identified.
3. Lack of training is there so that the staff and employees working in the organization know what is
going inside of the organization and how they have to tackle it.
4. In march when Natesh Goel said that he is going to leave the organization at that time jet airways
can take a new start but the decision to stay in the organization take the trust of banks and the
conditions gone in the worst direction.
5. In order to improve and organize the work in a manner they majorly focus on high standards,
degree of intelligence they forget to stay focused on work.
6. Since no emergency funding from the lenders or any other source is forthcoming, and not be able
to pay for fuel or other critical services to keep the operations going is the worst scenario that
happened with jet airways.

 At last jet airways can fly again if they have concentrated on the facts that they are lacking into
and managed their staff as they are on no. 3rd position at one time they can handle the situations
well . As the top level management is not skilled and their actions and decisions are not good for
the organization to run.