A day after Jet Airways “temporarily” shut down operations owing to financial distress, chaos and fear gripped its over 16,000 employees, besides investors.
Passengers too remained in the lurch, struggling to find ways to get refunds and avail the JP mile reward points.
The airline’s employees took to the streets in Mumbai and Delhi, protesting against ‘inaction by banks and apathy by the government’ that had landed the airline in the crisis.
At the stock market, investors dumped the company’s shares. Jet’s shares plunged 32.23% to close at ₹163.90 on the BSE on Thursday. The market cap has also come down to ₹1,862 crore. Fifty-two weeks ago, the company’s share was valued at ₹650.
“Today, there is hardly any value left in the airline. The lenders, by first making false promises to revive the airline, then removing the Goyals from the company and finally going back on their words as well as refusing to lend money, have destroyed all the value in Jet Airways,” said Mark Martin, CEO, Martin Consulting.
Banks blamed
It was the lenders who committed to provide an additional ₹1,500-crore loan against collateral, he said. “The airline had a greater chance of survival under Naresh Goyal. In less than a month of his exit, the banks brought it down” Mr. Martin said. “Now the bidding process is expected to fail. Those who had submitted EoI may withdraw.”
Employees blamed banks for dropping the revival and restructuring plan midway.
“Initially, the banks took charge of the revival. However, they refused a ₹400 crore loan, while lending to Air India which is also into losses. The government has to do a lot of answering. We also have families to run,” said a Jet Airways employee.
Ajay Bodke, CEO, PMS, Prabhudas Lilladher, said: “It is indeed a tragic day for the Indian aviation sector. Jet was the pioneer among private sector full-service carriers in India and consistently figured among the most-loved airlines for its warm hospitality and stellar service standards.”
“Jet’s failure follows a raft of other failures in the sector such as Kingfisher, Deccan and Sahara. National carrier Air India is a basket case kept alive by the government by infusing thousands of crores of taxpayers’ money,” he said.
“It is a reflection not only on the sub-optimal management of the operations by the owners of these carriers, but also of the sheer neglect by the aviation mandarins to incessant pleas from the industry to introduce reasonable taxation and tariff policies as well as other expenses charged by the airports,” Mr. Bodke said.
Meanwhile, Jet Privilege has reached out to JP members assuring them that their mile reward points would be redeemed and honoured by Etihad Airways, which owns a majority of Jet Privilege.
As per the latest regulatory filing on shareholding, Naresh Goyal and his wife Anita Goyal hold 51% stake, which means the banks did not acquire 50.1% stake for ₹1, as demanded by them and approved by the Jet Airways board on March 25, 2019. At the same board meeting, the Goyals were made to resign, which included Mr. Goyal stepping down as chairman.
IATA suspends Jet
Also, the International Air Transport Association (IATA) has suspended the Clearing House membership of Jet Airways with immediate effect.
“Consequently, claims by and against the above-mentioned airline will not be processed. Claims already submitted for clearance have been excluded by the Clearing House,” IATA said.
