Jet Airways, once India's second largest airline, suspended all flight operations in April 2019 due to financial problems. It had been struggling for years due to factors such as costly acquisitions, failure to adapt to budget carriers, poor management, fluctuating oil prices, and inability to attract new investors. Jet's losses increased as it took on more debt and failed to address its deteriorating financial situation. After three consecutive quarterly losses, Jet was unable to pay staff salaries and lessors began repossessing aircraft, leaving the airline no choice but to suspend operations.

1. PROBLEMS FACED BY
JET AIRWAYS IN
RECENT TIMES

2. INTRODUCTION
• Jet Airways (India) Ltd. was an Indian international airline
based in Mumbai, India which on 17 April 2019 has
suspended all flight operations.
• As of October 2017, it was the second-largest airline in India
after IndiGo, with a 17.8% passenger market share.
• As of July 2019, the company is undergoing insolvency
proceedings under Insolvency and Bankruptcy Code, 2016
• The loss of aircraft and friction with lessors is just the latest
major setback for Jet, which has been struggling for years,
beset by an insurgent group of low-cost Indian competitors

3. HISTORY
• Jet, is headquarters in Mumbai, India.
• Jet Airways was incorporated as an air taxi operator on 1
April 1992.
• It started Indian commercial airline operations on 5 May
1993 with a fleet of four leased aircraft.
• It began international operations to Sri Lanka in March
2004.
• Jet Airways was listed on the Bombay Stock Exchange and
became public company on 28 December 2004.
• Initial investment of US$10 million.

4. NETWORK
• Operates over 400 flights daily to 65 destinations.
• Agreements with 133 international airlines.
• Agreements with 64 carriers for carriage of cargo to their
destinations.
• Best Among the all Indian Airlines.

6. THIS DECLINE IN THE JET
AIRWAYS WERE FOR VARIOUS
REASONS.
SOME OF THE IMPORTANT REASONS ARE DISCUSS HERE:

7. 1. COSTLY PURCHASE
• 2006 purchase of Air Sahara for $500 million in cash.
• In 2015, Jet wrote off its entire investment. The acquisition is
a millstone around the company's neck.

8. FINANCIALS
• Annual Revenue - Rs. 9481.5 crores (2007-08)
Rs. 7401 crores (2006-07)
• Profit (Loss) After Tax - Rs. 253 crores loss (2007-08)
Rs. 27 crores profit (2006-07)
• All Other Domestic Players showed loss (2006-07)

9. 2. BUDGET AIRLINES
• Jet failed to take the trio (IndiGo, SpiceJet and GoAir
)seriously when they were founded between 2005 and 2006,
offering cut-price fares and previously unserved routes.
• They (Trio) were essentially assumed to be fringe players by
the Jet management.
• Jet always catered to corporates and failed to recognize that
low-cost carriers were attracting customers who were price
sensitive.

10. 3. POOR MANAGEMENT
• There was lot of the blame on Goyal's management style.
• They say his decision to have a single management team, headed
by himself, running all Jet's operations was a crucial mistake.
• Jet lacked a concrete business model and fiddled with it often,
which confused investors, (and) passengers alike, who believes
the company's decisions lacked transparency.
• Goyal has also been accused of making bad investments and
failing to address the company's deteriorating financial
predicament while borrowing heavily.
• Jet simply put, they spent more than they earned and kept
accruing debts.

12. 4. FLUCTUATING CRUDE
• During the period from June to September 2018, there was a significant
spike in global oil prices, forcing airlines to increase spending on ATF.
• Asian giant is a major importer of oil for all the carrier. When the rupee is
weak, fuel prices increases, the biggest cost burden for airlines.
• All Indian carriers including IndiGo and SpiceJet reported massive losses
but however jet , were saddled with debts.
• Jet Airways has a weaker balance sheet compared with other listed
peers. The carrier’s liabilities are higher than assets, giving it a negative
net worth.
• However, that cost was not transferred to the passengers owing to the
low-cost model. This lead to a considerable increase in operational costs.

15. 5. FAILURE TO ATTRACT INVESTORS
• Aviation analysts say Goyal's failure to find a strategic investor to
pump money into Jet extended the airline's losses, contributing to the
financial predicament it finds itself in today.
• Talks at the end of last year with tea-to-steel conglomerate Tata failed
to go anywhere, while Etihad Airways reportedly refused to increase
its stake because Goyal was at the helm.
• The 69-year-old was forced to give up control of Jet last month as part
of a debt resolution deal that saw a consortium of lenders led by the
State Bank of India take over the airline.

18. 6. THREE CONSECUTIVE QUARTERLY
LOSSES
• The premium airline suffered three back-to-back quarterly
losses starting from the
January-March quarter - loss of Rs 1,045 crore.
April-June quarter - loss of Rs 1,323 crore.
July-September quarter - loss of Rs 1297.5 crore.
• At one point of time, it was reported that the airline does
not have the capital to operate beyond 60 days.

20. 7. NON-PAYMENT OF STAFF SALARY
• The airline has even failed to pay salary to several members
of their staff, including senior pilots and even external
vendors.
• It had to cancel 14 flights in a single day after some pilots
called in sick over non-payment of remuneration, while 14
pilots bailed.
• Jet Airways has also let go of at least 36 employees in a bid
to cut costs.

21. THE MOST RECENT CRISIS
When What
March
2018
Jet Airways reports a loss of Rs1,036 crore in the Jan-March
quarter as revenue declines and costs increase significantly. The
company defers the March salaries of some employees citing
“circumstances beyond its control.”
April 2018 Bows out of bidding for Air India citing the complex process.
May 2018
The government refuses to approve Jet’s merger with its subsidiary
JetLite, nearly three years after the proposal was made.

22. June 2018
Jet announces new check-in baggage norms. The 15kg of free
check-in luggage for economy class will have to be in one bag.
Business class passengers can carry 30kg in two bags.
August 2018 Considers a 25% pay cut for employees.
August 2018
Indefinitely defers announcement of financial results for the April-
June quarter of financial year 2019.
August 2018
On Aug. 12, the Directorate General of Civil Aviation
announces an audit to assess Jet’s financial health. State Bank of
India asks the firm to provide enough collateral for emergency
funding.

23. August 2018
On Aug. 27, the company announces losses of Rs1,323 crore for
the April-June 2018 period.
September
2018
On Sep.19, the income-tax department conducts surveys in the
company’s Mumbai and Delhi offices over allegations of financial
misappropriation.
September
2018
The next day (Sep. 20), around 30 passengers on a Jet Airways
flight from Mumbai to Jaipur suffer nose and ear bleeding after
the cabin crew forgets to activate the internal pressure control.
India’s civil aviation minister Suresh Prabhu orders a safety audit
of all airlines and airports.

24. Market share of the
carriers

25. WHERE IS JET PLACED AFTER PROBLEMS?
• Etihad is said to have had enough and wants lenders to take over its 24% stake in
Jet, which is also behind on salary payments.
• Mr. Goyal has written twice recently to the staff members, seeking more time.
• Jet’s lenders, led by the State Bank of India, are said to have asked Mr. Goyal to
step down.
• Mr. Goyal wrote to Etihad’s board recently, saying that unless the latter infused
at least ₹750 crore immediately, the situation at Jet could become deleterious.
• The restructuring plan worked out with banks last month seems to have
collapsed.
• Lastly, the operations of Jet is ceased from 17 April, 2019.

26. THANK YOU!!