From being India’s largest international carrier to near bankruptcy
Naresh Goyal founded Jet Airways in 1993 with a fleet of four leased Boeing 737 aircraft. At a time when private airlines had just started coming up in India, Jet Airways, a full-service airline, grew fast to become India’s largest international carrier.
However, with budget airlines such as SpiceJet and Indigo entering the broil, the aviation industry became a highly competitive one. Calling themselves ‘budget’, SpiceJet and Indigo started offering low airfare, forcing Jet also to lower fares. But it continued to offer full services, increasing operational costs and forcing it to keep borrowing from banks to stay afloat. Macro-economic changes such as a weakening rupee and rising fuel costs only hurt it further. It all led to unpaid dues and grounded flights which put JetAirways into the fray.
Back in 2013, when Jet had a debt of over $2 billion, it struck a deal with UAE-based airline Etihad, taking advantage of new policy changed that allowed foreign airlines to invest in domestic airlines. The agreement, which almost went through, would have seen Etihad bringing in a new investor who would invest around Rs 1,900 crore for a 20% stake. This would mean that Goyal and promoter group stake would fall. Goyal, however, didn’t want promoter shareholder capping to be a part of the deal, following which the deal fell through.
Again in November 2018, Tatas offered to invest in Jet. However the deal didnt go through for the same reason since Tatas wanted full control, which would mean Goyal stepping down. Goyal wouldn't just give up.
As of March 25th, Naresh Goyal and his wife Anita Goyal has finally stepped down from the board of the company. This step brings some hope on the revival of Jet airways. What is the next move is not determined. This all depends on the steps taken by interested investors like Etihad and Tatas. It is to be seen whether or not the Jet aiways will be able to come back from the dead, and if it does, how it shall flare.
Yogendra Rijal
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