Jet Airways grounds aircraft as new era beckons
A series of media releases from India's Jet Airways is a stark indicator of the status of the financially troubled airline.
There seems to be consensus that the airline will survive, in a very different form, but meanwhile its efforts to stay afloat are very much part of the changing shape of India's new age aviation.
Privately owned Jet was the first major new entrant in the Indian, beginning scheduled operations in 1995. Etihad Airways acquired a 24% equity stake in 2013.
- Jet Airways, a legacy airline in India, is struggling to survive in a market dominated by low-cost carriers (LCCs).
- The airline's financial troubles have been ongoing for the past five years, with its expansion plans hindered by stiff competition.
- The government is providing implicit support to prevent Jet Airways from disappearing before the national elections.
- The airline has been grounding aircraft due to non-payment of amounts outstanding to lessors, causing disruptions to its network.
- Jet Airways is actively engaged with its aircraft lessors and providing updates on efforts to improve its liquidity.
- The airline is making efforts to minimize disruption and accommodate affected guests, while also providing updates to the Directorate General of Civil Aviation.
Jet Airways, a legacy airline trying to survive in a market dominated by LCCs
Jet was for many years a model of how a high quality full service airline should be. But, as LCCs entered the domestic market in the early years of this century, and a new price conscious market blossomed, the airline found it increasingly hard to compete. Today, 70% of the seats in the domestic market are on LCCs, led by IndiGo, which holds a one third share of a fragmented and often irrational market. At the same time, Jet Airways' expansion internationally was challenged as stiff new competition emerged.
Over the past five years, Jet Airways has navigated a tortuous path through financial troubles. It looked for a while as if Etihad's intervention onto the share register could be the path to future success, but an untidy relationship with founder Naresh Goyal, followed by Etihad's own financial implosion, failed to provide the escape needed.
Now, with implicit support from a government that doesn't wish to see Jet disappear just prior to the national elections, a group of bankers is ready to provide a way forward.
But first, they insist, the two major owners must help with the rescue: longstanding majority owner and founder Naresh Goyal and 24% substantial minority holder, Etihad.
In the meantime, the following sequence of grounding announcements offers a vivid but sad account of the pain the airline is enduring, as lessor payments fall behind. (According to CAPA's Fleet Database, at 4-Mar-2019, Jet's fleet consisted of 71 operational aircraft, with 39 In storage)
A sequence of media releases from Jet Airways
Update on grounding of (3) aircraft
"Further to our letter dated 4 March, 2019, we now write to inform you that an additional three aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements. As mentioned earlier, the Company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.
The Company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation in this regard.
We request you to take the above information on record.
Thanking you,
Yours faithfully,
Jet Airways (India) Limited,
Kuldeep Sharma
Vice President-Global Compliance and Company Secretary"
Update on grounding of (2) aircraft
"Further to our letter dated 2 March, 2019, we now write to inform you that an additional two aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements. As mentioned earlier, the Company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.
The Company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation in this regard.
We request you to take the above information on record.
Thanking you,
Yours faithfully,
Jet Ai s (India) Limited
Kuldeep Sharma
Vice President-Global Compliance and Company Secretary"
Update on grounding of (2) aircraft
"Further to our letter dated 28 February, 2019, we now write to inform you that an additional two aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements. As mentioned earlier, the Company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.
The Company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation in this regard.
We request you to take the above information on record.
Thanking you,
Yours faithfully, Jet Airways (India) Limited
Kuldeep Sharma
Vice President-Global Compliance and Company Secretary"
Update on grounding of (6) aircraft
"Further to our letter dated 27 February, 2019, we now write to inform you that an additional six aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements. As mentioned earlier; the Company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.
The Company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation in this regard.
We request you to take the above information on record.
Thanking you,
Yours faithfully,
JetAiI (India) Limited
Kuldeep Sharma
Vice President-Global Compliance and Company Secretary"
Update on grounding of (7) aircraft
"27 February 2019
Corporate Relationship Department, BSE Limited,
2nd Floor, New Trading Wing, Rotunda Building, P.J. Towers,
Dalal Street, Mumbai -400 001
Symbol: JETAIRWAYS/Series: EQ Debenture Scrip CODE: 952813
Further to our letter dated 23 February, 2019, we now write to inform you that an additional seven aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements. As mentioned earlier, the Company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.
The Company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation in this regard.
We request you to take the above information on record. Thanking you,
Yours faithfully,
Jet Airways (India) Limited
1:141!1"
Kuldeep Sharma
Vice President-Global Compliance and Company Secretary"
Update on grounding of (2) aircraft
Further to our letter dated 7 February, 2019, we now write to inform you that an additional two aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements. As mentioned earlier, the Company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.
The Company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation in this regard.
We request you to take the above information on record. Thanking you,
Yours faithfully,
ForJJ :ays (lndla) LimitedKuldeep Sharma
Vice President - Global Compliance and Company Secretary"
Update on grounding of (4) aircraft
"Further to our news clarification letter dated 30 January, 2019, we inform you that three aircraft that were grounded for engine normalization are back in commercial operations.
Four aircraft have been grounded due to non-payment of amounts outstanding to lessors under lease agreements. The Company is actively engaged with all its aircraft lessors and regularly provides them with updates on efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.
The Company is making all efforts to minimize disruption to its network due to the above and is proactivelyinforming and re-accommodating its affected guests. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation in this regard.
We request you to take the above information on record.
Thanking you,
Yours faithfully,
For Jet Airways (India) Limited
Kuldeep Sharma
Vice President - Global Compliance and Company Secretary"