India’s Jet Airways has temporarily suspended all flights from 10:30pm tonight after failing to secure desperately needed interim funding. With no means of purchasing essential commodities to keep their planes in the air, the entire airline is grounded for the foreseeable future.
It seems we’ve reached the final moments in the saga of struggling Jet Airways. Following a failed bid for emergency funding, the airline has announced it will cease operations from today. As they are unable to pay for fuel and other critical services, the airline says it has no choice but to suspend services.
In a letter to the Bombay Stock Exchange, the airline said:
“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.”
For passengers, the cancellation of Jet Airways flights has come at a very bad time. Although other airlines will often swoop in with rescue fares to repatriate stranded travelers, Easter is a very busy time for travel and there will be limited seats available.
This morning, the airline was operating a fleet of just 6 aircraft, down from 115 aircraft at its peak. After news of the temporary suspension, there are now fears that India’s Aviation Regulator could pull Jet Airways licence.
How the crisis developed:
In November 2018, Jet Airways faced huge negative losses and it had to balance its books in order to stay solvent. They owed money to lending institutions, support services, aircraft leasing firms and more.
Saddled with over $1bn in debt, the airline has been teetering on the brink of collapse for several months now. Pilots, ground staff, engineers and other employees have not received full pay since December, with many threatening to strike if they did not receive salaries soon.
Then, in March, a quarter of their fleet suddenly got grounded. After this, the owner of the business, Naresh Goyal, gave up his 51% stake in the company in an effort to allow his shares to be sold. Jet Airways managed to get a short loan from lenders as they sold off stock, to keep operations moving.
On April 5th 2019, Jet Airways’ fuel supplier cut off the company, refusing to refuel their planes until they had been paid. On April 10th, The aircraft operating Flight 9W321 to Amsterdam was seized by another airline over non-payment of fees. It is also believed that lessors are planning on seizing all of the Boeing 777 aircraft used by Jet Airways.
Once the biggest airline in India, Jet Airways had grounded almost all of its aircraft and left thousands of passengers stranded as it struggled to make ends meet. Just this week it was forced to cease international flying, as it didn’t operate the minimum required number of planes, and had to give up its valuable slots at Heathrow as a result.
Failed to secure interim funding
Jet had pinned all their hopes of a rescue on a meeting held yesterday. Meeting with their lenders, a consortium of investors led by the State Bank of India, the carrier hoped to secure some interim funding to keep them flying just a little bit longer. However, despite a marathon meeting that lasted more than six hours, it was revealed today that the outcome was not good.
In a statement, Jet Airways said:
“Late last night, 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,”
With no interim funds coming from the lenders and suspension of all its operations imminent,#JetAirways employees have lost all hopes and are bracing for tough times ahead. #JetAirwayscrisis https://t.co/sclIfKJpxR
— National Herald (@NH_India) April 16, 2019
This has left them unable to pay for essential items to keep flying, most importantly fuel for their remaining jets. As such, all flights are suspended as of today, and passengers left to find their own way home. The airline said that,
“Over the last several weeks and months, the company has tried every means possible to seek both interim and long-term funding. Unfortunately, despite its very best efforts, the airline has been left with no other choice today but to go ahead with a temporary suspension of flight operations.”
Most other airlines would have given up by now. With a huge debt and no concrete investment hope, you’d think it would be time to call it a day. Not so with Jet Airways.
Has the fat lady sung?
Apparently not. Jet Airways are not declaring bankruptcy just yet, which is good news for the 23,000 jobs it supports. They are clear that this is a temporary suspension of flights, and not a permanent solution.
The banks are still seeking a bidder for up to 75% of the airline. According to media reports, there have been multiple expressions of interest, including from Etihad Airways who are already a shareholder in Jet.
An investment in the airline could potentially save them from collapse, but the process of finding the right investor could take weeks or even months. Until then, Jet Airways will remain grounded; the longer that this goes on, the more difficult the investor will find it to resurrect the airline.
However, Jet Airways remain positive about the long term outcome, saying that, “Jet Airways is hopeful that it will be able to bring the joy of flying back to its guests as soon as possible,”
What to do if you’re booked on a Jet Airways flight?
Passengers are advised to contact their credit card issuer to see whether they may be able to get a refund on the flight tickets. Additionally, if flights are part of a package tour, they may be protected. Passengers in this circumstance are advised to contact their travel agent or tour operator.
Finally, some travel insurance packages have clauses for airline insolvency. If you have travel insurance booked for your trip, or an annual travel insurance plan, you should check to see whether you are protected in the case of airline bankruptcy. If this is the case, be sure to contact your insurance provider who will detail the next steps.