See More on Facebook

Business

Financially stressed Jet Airways suspends operations

The financially strapped airlines had been in distress for some time.


Written by

Updated: April 18, 2019

Embattled Jet Airways, once India’s largest private carrier, grounded itself late-night on 17 April (Wednesday) albeit temporarily after its lenders rejected pleas for an emergency fund infusion.

The airline, carrying a $1.2 billion debt, had been in a financial hole for the past few months.

The final straw was the failure of an emergency loan of over $ 200 million from its lenders for essential operations on an expense-to-expense basis to come through.

“The airline has been left with no other choice today but to go ahead with a temporary suspension of flight operations,” Jet Airways said in a statement.

Jet has in recent weeks been forced to cancel hundreds of flights and to halt all flights out of India as money ran out.

At its peak, the full-service airline operated over 120 planes and more than 600 daily domestic and international flights.

It has over 16,00 employees many of whom including pilots and technical staff have not been paid for months.

In its statement, the airline thanked its customers for their support over 25 years and apologised for the “disruption to the travel plans of all its guests”.

“Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going,” the statement added.

An official of the government-run State Bank of India (SBI), the lead banker of the consortium of lenders overseeing the company since its founder Naresh Goyal was forced to exit a few weeks ago, said a request for $58 million from Jet to keep itself temporarily afloat had been rejected.

The airline said it would continue to work with its banks who are trying to identify an investor to buy a majority stake and try to turn Jet around.

SBI last week accepted expressions of interest for an up to 75 per cent stake.  The process is expected to end by 10 May.

Goyal has already withdrawn from making a bid for the company.

A Reuters report quoting a leading business TV station said that Jet’s lenders were set to invite binding bids from four shortlisted suitors that include private equity firms TPG Capital and Indigo Partners, Indian wealth fund National Investment and Infrastructure Fund (NIIF), and Etihad Airways, which already owns a minority stake in the airline.

Shares in the company have tumbled about 60 per cent in the last year but Jet still has a market capitalization of nearly $400 million as investors have clung onto hopes of a rescue deal being clinched, the wire agency reported.

Jet’s CEO Vinay Dube, in a letter to employees on Wednesday posted on Facebook, said the sales process would take some time and could throw up several more challenges but he was “confident Jet Airways would fly again”.

Intense competition from low-cost carriers,  higher oil prices, escalating fuel taxes and a weak Indian rupee against the dollar are thought have exacerbated Jet’s financial woes.

The management style/strategic decisions taken by Jet’s founder-chairman are also thought to have contributed in bringing Jet to its knees.

This most notably includes buying floundering domestic carrier Sahara Airlines over a decade ago despite opposition from his own senior management team,

If no buyer can be found for the airline, it could leave thousands jobless.

That would have a political fallout as unemployment is a major issue raised by the Opposition against the Narendra Modi regime in the ongoing Indian general election.

Jet’s pilot union has iterated it has appealed to everyone including Prime Minister Modi to help out but to no avail thus far.

A series of meetings on trying to work out a way in which Jet stays afloat in one form or the other have been called by the Prime Minister’s Office (PMO) over the past two weeks.

India’s Civil Aviation Ministry too has said it is closely monitoring the process of finding a buyer for the airline and indicated it was willing to extend all possible help.

Fugitive liquor baron Vijay Mallya, former owner of the now-defunct Kingfisher Airlines and currently fighting extradition to India from the UK, has also stepped into the row.

Extending solidarity to Jet Airways and its founder, he has in a series of tweets attacked the government for “discriminating between public sector and private airlines”.

A Jet collapse would also be a potential blow to Boeing Co, which is already grappling with the fallout of two recent fatal crashes involving its 737 MAX aircraft. Jet has more than 100 of the 737 MAX planes on order.



Enjoyed this story? Share it.


The Statesman
About the Author: The Statesman is one of India’s oldest English newspapers and a founding member of Asia News Network.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Business

Excessive discounts worked against Nissan Motor profits

The company has been on the back foot since its former CEO was accused of mismanagement. Nissan Motor Co. has reported a massive 85 percent decline in operating profits — an area that indicates the strength or weakness of a company’s main business — in its midterm consolidated financial report for the half fiscal year ending in September. The pursuit of increased sales has harmed profitability, delaying the development of new Nissan models. That in turn has resulted in fewer sales — a vicious cycle the automaker is struggling to escape from. Nissan Motor’s deteriorating business performance may affect its three-way partnership with Renault SA, the French automaker that is its largest shareholder, and Mitsubishi Motors Corp. Failed strategy by Ghosn Nissan Corporate Vice President Stephen Ma, who will become chief financial officer on Dec. 1


By The Japan News
November 14, 2019

Business

US property loses allure for Chinese buyers

Economic factors contribute to falling demand.  Over the past 10 months, Bei Qin, a realtor in Silicon Valley, California, has not had any clients from China, a market that used to be her major source of business. “We had the best business in 2016 and 2017. Every day, we had inquiries from Chinese buyers and every week our WeChat account had more than 10 new subscribers,” said Qin, president of ACEQ Investment Group in Cupertino. “Now those days are gone.” After a decade of increasing investment by wealthy Chinese in residential property purchases in the United States-the biggest proportion of international buyers for seven consecutive y


By China Daily
November 12, 2019

Business

New OECD tax rule for multinationals lacks clear definitions

OECD rules are lacking for corporations around the world. A proposed system for taxing large multinationals, including global tech giants, unveiled by the Organization for Economic Cooperation and Development (OECD) last month has drawn mixed views on how it will impact Japanese companies. While one viewpoint is that only a limited number of companies will be subject to the new tax, the Japanese economic community expects nearly 100 domestic companies to be affected. The OECD plan is being considered because multinational enterprises, such as major digital companies that provide services across borders via the internet, are seeing rapid profit growth. The new rule will allow governments to impose taxes on companies which do not have a physical presence within their borders, such as a branch office or factory. The OECD aims to reach a broad agreement in Janu


By The Japan News
November 12, 2019

Business

Final bidding wraps up for sale of Asiana Airlines

Asiana Airlines have struggled after high profile accidents and debt. Bidders for the sale of Asiana Airlines, the nation’s second-largest air carrier, threw their hats in the ring Thursday for a last chance, raising market expectations as to the fate of the cash-strapped company. Kumho Industrial has put a 31 percent stake in Asiana Airlines up for sale. Three bidders — Aekyung Group, Hyundai Development Company and Korea Corporate Governance Improvement — submitted applications. Kumho and Credit Suisse, the lead manager of the sale, are expected to undertake financial assessments for a week or two and then pick a preferred bidder. They ar


By The Korea Herald
November 8, 2019

Business

Son defiant as investments in new firms jolt SoftBank

By Tomofumi Yonezawa and Ryosuke Terunuma / Yomiuri Shimbun Staff Writers. SoftBank Group Corp. Chairman Masayoshi Son took huge losses caused by investments in start-up companies on the chin, but he remains bullish about the future. “No excuses. I’m reflecting on this,” Son said Wednesday at the start of a press conference in Tokyo after the company reported interim consolidated business results that showed operating profit in the business period ending in September had tumbled into the red for the first time in 15 years. This was due to big losses in SoftBank’s investment business, which has expanded in recent years. SoftBank’s results could even have an impact on global investment trends in start-up companies dubbed “unicorns.” Son wore a solemn expression during the press conference, and he used the word “hansei,”


By The Japan News
November 8, 2019

Business

Xi Jinping says China will focus on imports, further lower tariffs

China has made overtures to increase capital income in recent months. Chinese President Xi Jinping told world and business leaders at the opening of a mega trade fair on Tuesday (Nov 5) that China would honour its commitment and promises, as he renewed a pledge to open the Chinese market and economy to foreign companies. His comments, made at the China International Import Expo (CIIE) in Shanghai, hit back at the European Union and European business leaders, who over the past week said China was not doing enough to level the playing field for foreign firms. Mr Xi said there has been progress on the commitments he announced at last year’s CIIE, which included an expansion of Shanghai’s free trade zone, a lowering of tariff levels as well as boosting integration of the Yangtze River Delta. “This shows that we do honour our commitments, and we will deliver on what we have promised,” he said


By The Straits Times
November 6, 2019