Delhi: Jet, once India’s second-largest airline, suspended its operations on Wednesday midnight. It has failed to secure interim funding of Rs 400 crore for maintaining even bare minimum operations. The airline operated its last flight of the day at around 10.30 p.m. from New Delhi to Amritsar.
From a fleet of 119 until last year to grounding of the entire fleet on Wednesday midnight, Jet is the second airline after Kingfisher to run into acute turbulence. Vijay Mallya was among the first to take to social media and express his solidarity with Jet founder Naresh Goyal.
As he lamented the latest instance of ‘airline karma’ he wondered why so many airlines have bitten the dust. The airline, saddled with more than Rs. 8,000 crore of bank debt, has been teetering for weeks after failing to receive a stop-gap loan of about Rs. 1,500 crore from its lenders, as part of a rescue deal agreed upon in late March.
“Bankers did not want to go for a piecemeal approach which would keep the carrier flying for a few days and then again risk having Jet come back for more interim funding,” a bank source directly involved in Jet’s debt resolution process told news agency Reuters. Jet’s creditors, led by SBI, want a new investor to acquire a stake of up to 75 percent and initial expressions of interest were submitted last week.
The crisis at Jet has hit its employees hard with hundreds not getting paid for months. No wonder, the grounding of Jet is being likened to the collapse of Kingfisher Airlines, which wound up operations in 2012, costing thousands of jobs and crores of rupees in losses to it lenders and lessors.
But the change in fortune for the airline has not dented investor confidence as the Jet counter continues to remain resilient. Jet’s scrip is down just by a little over 6 per cent since January 1. For Jet, the developments are unlikely to pan out as they did for Kingfisher. Analysts say that this is largely owing to Jet’s 30 per cent market share on international routes.
“The government is keen that they should keep this entity afloat by selling it to other airline partners,’’ Sandeep Raina, Associate Director, Edelweiss Professional Investor Research, told IANS. “In the case of other airlines facing stress, the government reacted differently largely because of their lower share on international routes,” he added.