The largest Indian private airline has just suspended all international flights following a huge debt the airline is facing.
There are fears that the airline could collapse with more than 1bn$ of debt. Now, the airline is seeking a governmental help to avoid the collapse.
Jet Airways was founded in 1992 and today it flies to more than 52 destinations worldwide with its 115 aircraft in their fleet. However, due to the recent crisis the airline has reduced its operational aircraft to currently 14 aircraft.
The airline has delayed payments to employees, banks, suppliers and aircraft lessors.
REASONS BEHIND THE CRISIS
The core of the crisis lays in Jet Airways founder Naresh Goyal. He and his family currently own 52% of the company. On the other hand, Etihad owns 24% of the shares and wanted to inject more money into the airline to take bigger control. As part of the agreement Mr. Goyal was expected to step down as a chairman. However, he refused. Few months ago, similar situation happened when India’s largest conglomerate the Tata group wanted to buy the airline to only get stuck when Mr. Goyal refused to step down.
Etihad wants now to sell its 24% of shares and leave Jet Airways. Any future potential investor that would rescue the airline would need Mr. Goyal to step down which is becoming the biggest obstacle in any potential business with him and his family.
The situation gets more interesting as Indian government is now seeking ways to fund the airline as the governmental elections are very soon in India. The Indian government wants to avoid job losses ahead of the elections and request the banks to swap the debt for equity.
The problem, again, lays with Jet Airways founder Naresh Goyal.
