The crisis-hit airline company has been struggling to get back on its feet. The company owes a massive debt of ₹8,400 crore to its creditors. Most of the top management & employees have resigned amidst the rising tensions in the company and non-payment of salaries. The company slowly started to ground their aircraft’s on account of non-payment of their leases. On April 17, 2019, the company had to ground all of its operating aircraft’s due to the lack of funds.
Another blow for the Jet :
There was a belief in the market that Jet Airways will receive backing from Hinduja to get itself out from the debt trap. Hinduja group had to negotiate with Etihad Airways which has a 24% stake in the debt-laden company.
However, the negotiations failed between both the companies, adding further uncertainty towards Jet’s revival.
Apart from the Hinduja group, the creditors of Jet have received some unsolicited bids. The bids are from UK’s Jason Unsworth and Mumbai based Adigro Aviation & Darwin group. However, creditors who are led by the State Bank of India (SBI) are unwilling to accept such proposals. The creditors believe that that bidders lack the credentials required for operating a large scale business.
The creditors are constantly exploring options to recover their debt from the financially stressed company. Investors were approached and legal guidance is sought after for recovering dues. The creditors are inspecting elements like capital, ability & experience in the aviation industry while seeking for investors.
Impact :
According to the credit rating agency, ICRA, the grounding of Jet Airways has impacted the capacity of the aviation industry by around 14%. It resulted in a decline of 4.2% in domestic air traffic in April 2019.
The grounding of the airlines also led to steep hikes in the fare prices in the industry. The prices have soared 30-40% presently in March 2019 compared to the prices in September 2018.
Meanwhile, when Jet Airways was struggling, other airline companies like Spice Jet & Indigo reaped the benefit of the situation. Rival’s re-allocated Jet’s slots amongst themselves. Jet’s employees were absorbed and their customers were targeted by other airline companies. The performance of the airlines was reflected in their share prices. The share price of Indigo has more than doubled in the past 6 months whereas Spice Jet doubled in the past 2 months. Indigo recently broke a record by capturing 49.9% of the market in May 2019.
