Jet Airways Failure
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parthiJet Airways Failure
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parthiJET AIRWAYS DOWNFALL
HISTORY
Jet airways was founded by Naresh Goyal on 1st April 1992.
It commenced its operations on 5th May 1993 with 4 leased Boeing 737 aircraft.
The number of its passengers increased from 0.663 million in 1993 to 5.9 million in
2000-01.
It had emerged as the most popular domestic airlines in India.
It launched its 1st international flight in March 2004 from Chennai to Colombo.
It became public company on 28 December 2004.
On 12 April 2007, it acquired Air Sahara for US$210 million, and renamed it as JetLite.
As of October 2017, it was the second largest airline in India after IndiGo, with a 17.8%
passenger market share.
PATH TO FAILURE
On 27th August 2018 Jet Airways reported losses in the June quarter.
On 6th September 2018 media reported non-payment of salaries to its employees.
On 1st January 2019 Jet Airways delayed payments to the consortium of Indian banks led
by SBI.
On 8th February 2019 it grounded four aircraft after failing to make payments to debtors.
On 14th February 2019 the Jet Airways board approved the rescue deal which made
lenders the largest shareholder, in a bid to fix a funding gap of 85 billion rupees.
On 25th March 2019 Jet Airways founder Naresh Goyal stepped down as chairman.
On 3rd April 2019 it grounded more than three quarters of its fleet.
On 12th April 2019 India’s aviation secretary said that Jet Airways has funds to stay in
operation only till 15th April 2019.
On 17th April 2019 Jet Airways was forced to suspend its operations indefinitely as their
petition for getting emergency funds was not honored by lenders.
REASONS FOR FAILURE
Merging with Air Sahara in 2007, at a whopping amount started the downfall of Jet
Airways. It was rebranded as ‘JetLite’ which suffered losses and Jet Airways wrote its
entire investment off.
The poor management was also stated as one of the main reasons for the downfall as
there was only one management team who was running all the operations of Jet
Airways.
The then CEO Naresh Goyal was accused of making bad investment decisions and
lacked transparency, the Jet Airways spent way more than what they earned and kept
piling debt.
Fluctuation in crude oil prices and the fall in Rupee against major currencies added to
the burden.
Jet Airways failed to find strategic investors to pump big money into the company
which resulted in the financial crisis.
