Boeing Is Giving Aid To Struggling Jet Airways


Around three weeks ago we reported that Jet Airways was in financial trouble. The Indian Airline today announced its Q1 results. Aware of the airline’s financial difficulties, Boeing is offering Jet Airways financial aid.

What’s The Story?

At the start of the month the CEO of Jet Airways, Vinay Dube, was forced to issue a press release regarding the future status of the airline. Multiple media reports stated that the airline had 60 days to massively restructure or suspend operations. At the time Mr Dube commented “In line with the Company’s stated focus of creating a healthier and more resilient business, it has been implementing several measures to reduce costs as well as realize higher revenues, for desired business efficiencies. Some of these areas amongst others include, sales and distribution, payroll, maintenance and fleet simplification.”

Poor Financial Performance

Today Jet Airlines revealed their Q1 results from the current financial year. This showed that the airline had made a loss in this quarter. A statement from the Board of Directors starting “Jet Airways continues to be a going concern”, while adding “Macroeconomic headwinds continue to impact financial performance“. The statement later outlined the airline’s financial performance in more detail.

“For the quarter ending 30th June 2018, Jet Airways Group reported a net loss of INR 1,326 crores, compared to a net profit of INR 58 crore in Q1FY18 … Macroeconomic factors led by an increase in Brent fuel price by more than 36%, a depreciating rupee and the resulting mismatch between high fuel prices and low fares primarily undermined Jet Airways’ performance in the quarter.”

Boeing Bailout

Jet Airways currently has 225 B737-MAX aircraft on order from Boeing. 50 of these are on direct order from Boeing, with the rest to be leased. It’s in Boeing’s interest for Jet Airlines to stay afloat with this in mind. This isn’t the first time that Boeing has lent financial support to an airline. Several years ago fellow Indian operator SpiceJet was also helped by Boeing. While the amount of aid is not stated, reports state that the aid Boeing is giving Jet Airways extends to include returning some progress payments in addition to some deposits.

Jet Airways B737-Max in flight
Jet Airways has ordered 225 B737-MAX aircraft. Photo: Boeing

Government Investigation

While all of this is ongoing, the Indian government is also reportedly investigating Jet Airways. The investigation based in Mumbai is centred around funds siphoning. Indian regulations define funds siphoning as using bank loans for purposes not related to the airline’s operations.

What’s Next?

It’s clear that Jet Airways has to give its finances some serious attention over the next few weeks. While TPG Capital, part owned by Etihad Airlines, is reportedly interested in making an investment, no deal has yet been reached.