Update: Jet Airways’ Founder-Chairman Naresh Goyal has stepped down. The board has approved an immediate funding support of Rs 1,500 crore. New investors will start bidding in June.
Jet Airways, once India’s top airline company, saw its stock price go down from INR 651.40 to 162.80 within 52 weeks. Things don’t look good for Jet at this moment. Apparently, it will take no less than a miracle to get the company back on a profitable track.
Jet Airways’ Founder-Chairman Naresh Goyal started working on Jet in 1993, following the Open Skies Policy by the Indian government. He became one of the richest people in India after the Jet IPO in 2005.
Earlier in January, it was reported that Goyal was willing to invest 700 crores in Jet in order to stop Etihad Airways from increasing its stake in the company. At this moment, Etihad Holds 24% stake while Jet promoters hold 51%.
Goyal’s announcement came soon after Etihad had stated that it was likely to consider increasing its stake in the company. The second-largest airline of the United Arab Emirates, however, refused to pay more than INR 150 per share. Following Etihad’s statement, Jet Airways shares dropped 8%.
Jet Airways has not been able to make an operational profit since 2015, which basically means that it has been struggling to have more operational income than its operational expenditure. Four years back, when it had an operational profit, it achieved so by selling a piece of land at Bandra Kurla Complex in Mumbai, India. The money it received from Jet privilege private limited (JPPL), its loyalty program, also helped.
Etihad stopped sending funds, and low-cost airlines like Spicejet and IndiGo continued to operate with tighter operational costs. CNBC-TV18 reported that Jet continued to earn less than it spent. And, with capital loans to pay back, it failed to have enough money to breakeven.
Jet Airways needs a miracle now. It needs to cut down operational costs and make profits to have enough to repay the loans. Having operational profits seems to be the only way at the moment to restore Jet’s position as one of the leading airlines in India.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]