The government on Tuesday called an emergency meeting with Jet Airways management to contain the crisis. The meeting took place after civil aviation minister Suresh Prabhu intervened and asked the secretary to take stock of the situation.
New Delhi: The government on Tuesday called an emergency meeting with Jet Airways management to contain the crisis that has been looming for a few months now. The meeting took place after civil aviation minister Suresh Prabhu intervened and asked the secretary to take stock of the situation. The Directorate General of Civil Aviation (DGCA) also has said that there are 41 Jet flights that are operational but stated that the situation is 'dynamic'.
The umbrella body of the airline's domestic pilots have threatened to stop flying from April 1 unless their dues are cleared by the end of this month.
So how did Jet Airways get into this mess, in the first place?
1. Money, money, and only money
The airline is cash-strapped and is struggling to make payments to its creditors. It has been forced to cancel hundreds of flights. Operating flight costs, fuel and aviation turbine fuel (ATF) do not come cheap. This January, news agency Reuters had reported that Jet Airways management allegedly informed its pilots that with the fund at hand, they can operate for a total of 60 days.
2. Losses led to more loss
Three consecutive quarterly losses, fund crunch and stiff competition have left the once market-leader in a state of frenzy. Reports suggest Jet Airways sought shareholders’ approval for converting loans into shares. The company also tried to increase its authorised share capital to a whopping Rs 2,200 crore from a mere Rs 200 crore.
3. No takers
Talks with Etihad, which already owns 24% share in the cash-strapped airline, to buy more shares so that the airline can repay some of its loans failed. There was a buzz that the talks with Qatar Airways did not materialise as well. It too refused, citing that an 'enemy nation' already has a stake in the airline. Etihad is a UAE-based airline company and the Arab world was in a diplomatic faceoff with Qatar, virtually cutting it off from other Gulf countries using its influence.
Jet Airways pilots, unpaid for months now protesting outside airline's head quarter in Mumbai
4. No money to pay salary
Most Jet employees haven't been paid a salary on time. In fact, the airlines' engineers’ union said in a statement that flight safety is at risk as its employees haven't been paid for three months. The statement reads, " It has been arduous for us to meet our financial requirements, the result of which have adversely affected the psychological condition of Aircraft Engineers at work and therefore the safety of public transport airplanes being flown by Jet Airways Engineers Welfare Association." Needless to say, this statement was reason enough for the aviation regulator DGCA to rap the airline.
If that wasn't scary enough, the pilots were earlier reportedly asked to take a pay cut of 15% for two years, leading to more heartburn.
5. A near no-fly situation
The airline may have 41 operational flights, as per DGCA, but it is hardly in a financial state to keep them in the air. Forget flying, even asking airports or parking in a bay costs a bomb, which the airline seems increasingly unable to keep up with. On Monday, chairman Naresh Goyal assured he is "committed to have the process completed as soon as possible and restore much-needed stability".
But the government knows, there's a difference between claims and reality.
Meanwhile, Reuters reports, Modi government has asked state-run banks to rescue Jet Airways to avert thousands of job losses. Mass job losses, just weeks before a crucial general election can prove costly for the ruling dispensation.
Aviation ministry sources say, even if a bailout is given to Jet Airways, chances are the banks won't be keen to give anything beyond a temporary bailout, considering the huge amount of prevailing bad loans that are plaguing them. A top source within the ministry of civil aviation says, "It needs a permanent solution. Whether the banks will be keen enough to extend that help at this stage is a matter of suspect".
Be as it may, Jet Airways, once the dominant figure in Indian aviation is today in a deep mess and there's no point denying that.
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Last Updated Mar 19, 2019, 7:05 PM IST