NO FLY FOR JET AIRWAYS: SHARE PRICES DROP
Jet Airways one of India’s premium airline decide to temporarily suspend all the flights from Wednesday Night (17th April 2019) with NO cash to run operations any further.
At its peak, Jet operated over 120 planes and well over 600 daily flights. Canceling all international
operations last week the airline has operated fewer than 40 domestic flights daily since, using 7
CEO Vinay Dube had approached the lenders with an appeal for Rs 400 crore but at late night on 16th
April 2019, Jet Airways was informed by the State Bank of India (SBI), on behalf of the consortium
of Indian Lenders, that they are unable to consider its request for critical interim funding.
In a two-page statement late on Wednesday, Jet Airways announced “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. Consequently, with immediate effect, Jet Airways is
compelled to cancel all its international and domestic flights. The last flight will operate today.”
Intense competition from low-cost carriers, like Interglobe-owned IndiGo and SpiceJet Ltd, together
with higher oil prices, hefty fuel taxes and a weak rupee have piled pressure on the airline in recent
months. Jet has defaulted on loans as well as vendor and lessor payments. It has been forced to ground
planes since the beginning of the year primarily due to defaults to leasing companies. It hasn’t paid its
employees since January.
Meanwhile, its lenders are set to invite binding bids from four shortlisted qualified bidders that
include Etihad Airways that owns 24% of the airline, PE investors TPG Capital and Indigo Partners
as well as the state-run National Investment and Infrastructure Fund. They have to submit binding
bids by May 10.
If Jet fails to attract a buyer and collapses that would put thousands of Jet’s employees out of jobs,
many of whom have been unpaid for weeks or months, and affect thousands of others whose jobs are
tied to the fortunes of the airline.
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.
The crisis at Jet, which owes vast sums to suppliers, pilots, lessors, and oil companies, deepened in
recent weeks as its lessors scrambled to de-register and take backplanes, in a sign the bank rescue
the plan failed to assuage their concerns.
Shares in the company, which have tumbled about 60 percent in the last year, closed on Tuesday at
240.50 rupees a share. Indian markets were closed on Wednesday due to a public holiday.
The stock touched a low of 158.70 rupees on National Stock Exchange, down 34.01% from its
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