Jet Airways might be heading for bankruptcy as it seems to have lost the chance to secure a buyer.
Will Jet Airways fly again? That’s the question everyone has been asking ever since it shut operations in mid-April. The only meaningful assets that it has, airport slots (about 766), will go permanently to rivals by July-end if it is unable to find a buyer and fly again by then. And the only two entities interested in buying it — Etihad and Hinduja Group — are reported to have made it clear that they don’t want to take majority stake in the airline. That leaves bankers, who are owed 8,500 crore out of Jet’s total liabilities of over 17,000 crore, with no options.
With most of its prized assets gone, Jet, by all accounts, is in a bigger mess than Kingfisher Airlines ever was considering that the latter owed banks just 6,000 crore when it went bust. A large number of Jet’s grounded planes have gone back to lessors, and some of them (21 Boeing 737s) have been taken over by rivals SpiceJet and Vistara. Over 4,000 employees out of 14,000 have left the airline over the past few months, including CEO Vinay Dube, CFO Amit Agarwal and CPO Rahul Taneja. An airline typically needs 120-150 employees per aircraft. Assuming that it resurrects with 60odd planes, as suggested by advisor McKinsey & Co, it will require 9,000 people. Though it has the required numerical strength, the exodus of key personnel, including pilots, to rival airlines will prevent a smooth take off (see How Others Are Gaining).
The Bank Push
A revival seems wishful thinking. The lenders, particularly SBI, have been running helter-skelter to find a buyer after Etihad submitted a conditional bid last month for re-investing in the airline in exchange for a minority stake. In the last week of May, the lenders had asked for two weeks to find a domestic investor as they are reluctant to invest more — they promised 1,500 crore funding in February but later backed off and decided to auction the airline.
Bu hikaye Business Today dergisinin June 30, 2019 sayısından alınmıştır.
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Bu hikaye Business Today dergisinin June 30, 2019 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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