JET AIRWAYS – SUCCESS TO FALIURE STORY

Submitted By:

Pooja Narang – A09

Himanshi Chaudhary – A01

Dhruv Bhargav – A57

Raghu Rana – A16

Jet Airways came into existence in 1992. The share was divided amongst Naresh Goyal (60%),
Gulf Air (20%) and Kuwait Airways (20%). Jet Airways actually started flying in the year
1993 and the first fight was between Bombay to Ahmedabad. In 1997, government of India
passed the rule that there can be no shares of foreign companies in the domestic flights.
Therefore Naresh Goyal purchased rest of the 40% shares as well.

There was a time when Jet Airways was India‟s largest airline with 22.5% market share in Indian
Air traffic. They took over the Sahara airlines and converted it into Jet Lite. But this success
didn‟t stay for long with them with the entry of Indigo and Spice jet. These two new entrants
provided the lowest air tickets and jet started losing its customer base which forced jet to lower
its air fare. And they took more debt from market to sustain themselves in price war.

They reported their first unexpected loss in May 2018 which was Rs. 1036 crore in the fourth
quarter where as they had a net profit of 602 crores in the same year earlier.

May 2018, they company‟s net worth turned negative.

June 2018, they announced the new check – in norms.

August 2018, they cut the employees pay.

August 9, 2018, Jet Airways‟ first quarter results get deferred as the board seeks more clarity
from its auditors.

August 13, 2018, BSR & Co, an affiliate of KPMG India, refuses to sign on the first quarter
results of Jet Airways. The audit firm had raised doubts over the airline‟s ability to continue
operating.

August 28, 2018, the airline reports a loss of Rs 1,323 crore in the first quarter of the year. Its
fuel costs shot up by 53 percent. The company starts a cost reduction programme that intends to
save Rs 2,000 crore over two years.

September 20: A day after its offices are raided by Income Tax officials, 30 passengers on

board its Mumbai-Jaipur flight complain of nose and ear bleeding after its crew fails to activate

the aircraft's internal pressure control.

October: Despite threats of „non-cooperation‟ from pilots, the airline defers the payment of

salaries.

October 4: Rating agency ICRA downgrades Jet Airways‟ long-term borrowing programme.

October 18: Tatas carry out talks with Naresh Goyal for a possible investment in Jet Airways.

But talks with Tatas and Delta Air Lines stall over Goyal‟s future role. Prospective investors

want Goyal to cede control.

October 19: Jet Airways starts curtailing daily operations. 13 planes are grounded.
November 16: Tata Sons‟ board meets to discuss a proposal for Jet Airways. It insists on a no-

compete clause from Naresh Goyal. Talks between two sides go slow.

November 19: Ten flights from Mumbai are cancelled. While reports say pilots refused to turn

up on duty, the airline blames a “rostering” problem.

November 26: Naresh Goyal resumes talks with Etihad Airways, which already owns a 24

percent stake in Jet Airways.

November 27: The airline promises its pilots that it will clear its dues by March 2019. But the

pilots are not convinced.

December 2: More flights are cancelled as pilots call in sick.

December 3: The airline closes services across seven Gulf routes. Up to 40 flights a week are
cancelled.
December 31: Jet Airways defaults on debt repayments for the first time.

February 21, 2019: An EGM clears a banks-led resolution plan, including the fresh allotment of
shares to lenders.

February 28, 2019: By now, Jet Airways is forced to ground about 50 of its aircraft.

March 25 2019: Founder Naresh Goyal and wife Anita step down from the board of the airline.

April 8 2019: Lenders call for expression of interest (EoI). In a twist Goyal also puts forward an
EoI. Others including Etihad Airways, TPG Capital, Indigo Partners and NIIF also join the fray.

April 15 2019: CEO Vinay Dube writes to banks for emergency funding of Rs 1,000 crore. But
lenders don't budge.
April 16 2019: Goyal quits the race, but lenders refuse to give interim funds.

April 17 2019: Jet Airways announce the temporary shutdown of its operations after lenders turn
down a request for funds.

Reasons for downfall:

1. Merger: Jet Airways merger with Sahara was a big mistake. They spend $ 500 millions
to acquire sahara.
2. Converting Sahara into JetLite
3. Mismanagement: Naresh Goyal did not hire any professional to run this company, he
himself handled all the things.
4. Drowning in debts: Jet Airways irrespective of lot of debts, they kept on taking more.
Their debt was more than their earnings.
5. Higher feul cost: The fluctuations in global crude prices was also one of the main
reason.
6. Price sensitivity: Jet underestimated the low cost carriers like spice jet and indigo.