This week’s instalment in the Jet Airways saga involves the airline’s loans. For those of you who haven’t been following the story, Jet Airways is currently in serious financial trouble. At the start of August, we reported that Jet Airways may have only had 60 days to cut cost before the airline would have to cease operations. The airline seems to have passed the 60-day hurdle. Half a month later, the airline began to receive financial aid from the aircraft manufacturer Boeing. With Boeing currently processing $8bn USD worth of orders from the airline, it is definitely in their interest for the airline to stay afloat.
At the start of October, Eithad was forced to buy Jet Airways’ frequent flyer program for a cost of $35m USD. The most recent news that we reported was on October 16th. Jet Airways was forced to ground four of its wide-body jets in an effort to cut costs. In addition, they were offering staff 50 days of unpaid leave. This was in order to save on almost 14% of the affected employee’s salaries.
So What Is The Latest?
Jet Airways is currently seeking a loan moratorium. A moratorium is a temporary prohibition of an activity. In this case, Jet Airways is seeking to pause repayments on their loans. While this is ongoing, the airline has also asked banks for fresh cash according to Bloomberg. While reviewing its routes to cut unprofitable domestic flights, the airline is also reportedly looking to lay off staff who are non-essential to the operations of the airline.Founded in 1992, Jet Airways has been struggling financially for a number of months. Photo: Jet Airways
In a statement to the press, a company spokesperson said: “The board approved turnaround strategy is under implementation. The strategy encompasses various cost-reduction and revenue enhancement initiatives including working on [the] restructuring of our balance sheet via debt-reduction, streamlining cash flows, payroll optimization, exploring funding options such as capital infusion, monetization of company’s stake in its loyalty program, and several other measures, to realize higher productivity and operational efficiencies.”
The airline is currently India’s largest full-service carrier. Having made losses in the past 9 out of 11 years, however, it is unclear how long Jet Airways can carry on under these circumstances. Accordingly, the airline’s share price has reacted accordingly. A year ago the airline’s shares were at 512. By January they had reached a high of 870, however, they now sit at 212.95.
How long do you think Jet Airways can continue given the current circumstances? Let us know below!