Jet Airways has yet again defaulted on another loan payment. The airline has been in some high profile financial difficulties, and most recently has failed to pay around $246 million of debt. The figure has been steadily increasing since the first payment was missed early in the year.
Since making a substantial aircraft order last summer, the carrier’s financial difficulties have been steadily increasing. Jet Airways has previously had to ask Boeing for financial aid, however very little progress to solve the debt crisis has taken place to date. It seems as progress may finally be made as Chairman of the airline Naresh Goyal has stepped aside.
Seven months of trouble
Jet Airways has now been in financial purgatory for seven months, following hints over the airline’s economic health in August. Back then it was reported that Jet Airways had just 60 days to turn itself around or risk closure. Somehow, the airline has kept going.
As a result of these issues, the Jet Airways has received financial aid from Boeing, in addition to seeking the postponement of loan payments. The airline has also had sanctions placed against it, and currently has a large majority of its fleet grounded. This is due to lessors who haven’t been paid not wanting their aircraft flying for free. In fact, when the Boeing 737 MAX was grounded, Jet Airways felt very little impact, as all of their MAXs were already grounded. The airline previously told Simple Flying:
Jet Airways has five B737 MAX in its fleet but is currently not flying any of these aircraft.
Can Jet Airways recover?
Jet Airways has certainly shown resilience by surviving seven months of financial strife, and it looks as though the airline may finally be close to a way out. The Chairman of the airline stepped down after 25 years at the helm. Now it is up to Vinay Dube, CEO of the airline, to attempt to steer it back on track.
The banks supporting the airline are set to appoint new directors to the carriers board shortly. Additionally, in a debt for equity exchange, some of the airline’s creditors are set to assume stakes in the airline. The next step for Jet Airways is to repay some of their most serious debts. This principle includes paying aircraft lessors. While the airline’s planes are grounded, they are not making money which does not help the spiralling debts.
With new leadership, the airline has the potential to turn itself around. This is likely to take some time, and things could get worse before they get better. However, now that creditors are involved in the process, things should be easier going forward.
Do you think Jet Airways can leave its financial pit? Let us know in the comments down below!