In its biggest fall since listing, shares of Jet Airways India Ltd slumped over 34% today after the cash-strapped carrier that was once ranked India’s second-largest airline suspended operations temporarily after failing to secure emergency funds.
The stock touched a low of ₹158.70 on National Stock Exchange, down 34.01% from its previous close. Jet listed on exchanges on 14 March 2005 with an issue price of ₹1,100 a share. At 9.38 am, the scrip was trading at ₹172.90 on NSE, down 28.11% from previous close.
Rival SpiceJet Ltd surged 8.5% to hit over one-year high levels while InterGlobe Aviation Ltd rose 2%. India's benchmark index Sensex rose 0.36% to 39,418.45 points.
"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 like Kingfisher, Deccan, Sahara etc. The national carrier Air India is a basket case kept alive by the government by infusing thousands of crores of taxpayers revenues", said Ajay Bodke, chief executive officer, Prabhudas Lilladher.
"It is a wake-up call for the aviation authorities to seriously ponder as to why India is emerging as a treacherous graveyard for Indian carriers. 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 of incessant pleas from the industry to introduce sensible & reasonable taxation & tariff policies as well as other expenses charged by the airports," Bodke added.
Earlier, Jet had requested banks to infuse ₹400 crore funds to keep some of its planes flying till the lenders found a buyer. However, analysts say banks have rejected Jet Airways's request due to no clear visibility of cash flows.
"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 company said in a notice to BSE.
The airline said it would await the bid finalization process by the lenders that is likely to bring in fresh equity by the end of May.
Jet Airways has deferred interest payments to banks, and dues to fuel suppliers, oil marketing companies and aircraft lessors. As a result, lessors of the airline have grounded most of its 119 aircraft.
It has also held back salaries since January to a section of its employees, including pilots, engineers and general managers. In addition, the carrier has deferred March salaries to all its employees, as it continues to battle financial woes. In the last few months, about 250 pilots have left the airline, while 23 more resigned on Tuesday, leaving their strength in the airline at about 1,300.
