Jet Airways, a struggling airline that once was the poster child of the aviation in India, is down to 20 or so planes from from more than 100 just few months ago. Jet has been forced, as a result, to cancel the majority of the flights and suspend most of its routes.
The airline was supposed to get a temporary cash infusion to keep the operations going from a consortia of banks but that apparently hasn’t taken place. Employees haven’t been paid since late December. Now there is supposedly an “auction” taking place this weekend to gauge interest among potential bidders (who would like to buy/invest into a bankrupt airline?).
Here’s an excerpt from Nikkei Asian Review (access their piece here):
The lenders leading the rescue of debt-laden Jet Airways said they will open bidding Saturday for a stake in the Indian carrier but kept mum on the timing of a 15 billion rupees ($218 million) cash infusion needed to keep it running.
The consortium led by State Bank of India announced the bidding Thursday, amid a deepening crisis at the airline.
Failure to pay aircraft leasing companies has shrunk Jet Airways’ operating fleet, which is down to just 26 planes from more than 120. More planes were taken out of service this week.
The airline has defaulted on interest payments, and employees have not received their pay for several months. Pilots have threatened to stop flying April 14 unless they receive their salaries.
The airline has 20 or so operation planes left (number decreases every day) and 16,000 employees who are waiting for their salaries? Why anyone would invest to an airline that is more than a billion USD in red?
These airline collapses are always messy and often prolonged. Remember what happened with other Indian airline that was about to join Oneworld Alliance (Kingfisher)? Creditors and lessors first start repossessing frames leading to cancellations, consumer confidence evaporates and ticket sales tank.
Nobody would like to see Jet Airways collapse, but is extremely difficult to bounce back from a situation such as this.