Jet Airways Crisis

Stocksbaazigar discussed Jet Airways Crisis in detail in November 2018 in the post Jet Airways Crisis explained. It was predicted then that deal with Tata Group won’t materialize as the Founder Naresh Goyal wasn’t ready to cease his control over the aviation company which he started in 1993. Jet Airways has the second largest Market share in India after Indigo in the Aviation sector. Naresh Goyal is a pioneer of Private Aviation industry in India. In 1992 when the Government of India accepted the Liberalization, Privatization and Globalization reforms under P. V. Narasimha Rao Government, he was the first to take a leap of faith with the incorporation of Jet Airways in 1993 which became fully functional airlines in 1995. Jet Airways served 26 years to Indian and Foreign Customers before all its flights getting grounded recently. We have already discussed all the reasons for this Financial crisis in the above-mentioned post. Now, let’s analyze the current situation of Jet Airways. Naresh Goyal and his wife stepped down Founder Naresh Goyal has 51% stake in Jet Airways which he founded in 1993. He and his wife Anita Goyal agreed to step down from the board of Jet Airways after their board meeting on 25th March. Etihad Airways which owns a 24% stake in the company also decided to step down. Employees of Jet Airways and all the experts in the Aviation industry blamed Naresh Goyal for not taking timely actions and made him cease the Chairmanship of the company. Jet Airways grounded all its flights The Interim Management set up to monitor the situation decided to halt its all operations and grounded all its flights after unpleasant situations like Strike by Pilots, Protests by Employees, etc. after intervention by Government. It is clear that Government has a soft-corner for Jet Airways which is saddled with more than $ 1 bn debt and may face the fate of Kingfisher Airlines very soon. But they won’t take any action now thanks to the Loksabha Elections 2019. Supreme Court questioning the forceful control of Jet Airways by lenders to find new Buyers for it as per the Revival Plan has also created the panic in the market. Jet Airways Shareholders are worried Kingfisher Airlines has a similar script like Jet Airways. KFA acquired Air Deccan and its problems started. Jet Airways took over Air Sahara and its problem started. The debts started increasing thanks to increasing ATF. This lead to erosion of the valuation of Jet Airways significantly. We saw stock price touching 158 last weak which is a big concern for all the 1,58,000 Retail shareholders who are stuck in it. Only five Mutual Funds has some exposure in Jet Airways but they were smart enough to reduce their exposure significantly over the quarters. Indigo and SpiceJet were preferred over Jet Airways by them which saved them. Vijay Mallya took a dig at Government Kingfisher Airlines Ltd and Jet Airways Ltd both served premium clients and had healthy rivalry before former Airline went bankrupt and willful defaulter Vijay Mallya ran away from India. When the ‘Revival plan’ of Jet Airways came out, Mallya couldn’t stop himself from showing his anger on Government. In a series of tweets, he targeted both Government and Jet Airways. He claimed that he could have saved KingFisher Airlines easily if Government had bailed out it the way they are planning to bail out Jet Airways. He may be right about the partiality Government is doing in this case but people are aware that Vijay Mallya is ‘Bhagoda’ while Naresh Goyal did not run away from the situation. Goyal neither diluted his stake in JetAirways nor stopped his attempts to find a Buyer who can save Jet Airways. He was ready to reduce his stake from 51% to 15% in the possibility of Win-Win deal with potential buyers. Customers react to JetAirways Crisis Frequent travelers of Jet Airways are really upset to see the ongoing development in Jet Airways Ltd. They showed solidarity to the employees of Jet Airways who served them for so many years. They are really optimistic about the survival of Jet Airways. Not all customers are that loyal. Many customers of Jet Airways faced inconvenience when flights were canceled on last minutes and they didn’t get refunds of the same. They showed their anger on Social Media. Travelers who pre-booked seats in Jet Airways for their summer vacation went to Andheri office for their refunds but they were requested to cancel the tickets through the platform they booked the tickets. It is said that those who booked tickets directly using Website and App of JetAirways will get a refund within 7 days. But those who booked tickets through agents have to wait for an indefinite time. Jet Airways stopped its operations on 17th April 2019 which created a great vacuum in the sector. The airfare tickets are skyrocketing by almost twice the price. Low fare No-frills airlines are getting benefited by Jet Airways Crisis. Unfortunately, premium clients who travel by Jet Airways rather than low-cost airlines only for the good experience of traveling are missing Jet Airways the most. Jet Airways Employees seek President’s intervention for salary dues. Jet Airways Pilots didn’t receive their salary for 3 months. Other staff didn’t get a salary for last month while Executive level employees have not got any salary from last 7 months. Aviation Minister Suresh Prabhu and DGCA Chief both raised their hands by saying that Jet Airways Ltd being Private Airlines, they must seek clarification from the Interim Management of Jet Airways about their Salaries. Govt itself facing problem to run Air India which has more debts than Jet Airways and 76% disinvestment plan in it has been postponed due to some unavoidable reasons. Jet Airways Employees have decided to approach Prime Minister Narendra Modi and President Ram Nath Kovind to seek their intervention for their salary dues. They are desperate now as they don’t have any guarantee of their jobs nor money to … Read more