Jet TIMELINE

Timeline of Events
1. Acquisition of Air Sahara:

In 2007, Jet Airways acquired Air Sahara, which was the first step towards this
crisis. This was done to compete with the low-cost airlines operating at that time
and in turn hampered the financials of the company.
Jet renamed Sahara Airways as Jet Lite. Sahara at that time was a well-known
brand among Indians. This rebranding didn’t pay off as flyers who were attracted
towards the Sahara brand image couldn't resonate with JetLite.
In the same year Jet airways started simultaneous operation of wide-bodied
aircraft-B777-300ERs and the A330-200s. This greatly increased costs for
operations, maintenance, and engineering.
2. Alliance with Etihad

In 2013, Jet forged a strategic alliance with Etihad Airways, becoming the first
beneficiary of a policy change that allowed foreign airlines to invest in domestic
ones. Etihad Airways bought 24% stake for $379 million.
Just like other airlines that Etihad had earlier invested in, Jet Airways was not
performing well prior to Etihad’s investment. Etihad went through a series of
strategy changes, one of which was to more align its product with low-cost
carriers, densifying cabins and shifting a significant part of its domestic flying to
a no-frills model; and then switch back to the full-service model. All of these
changes did not help Jet’s situation. There was a pattern with what happened to
other carriers Etihad invested in–Air Berlin, Air Serbia, Air Seychelles, Alitalia,
Virgin Australia–given all of them have been forced or encouraged to change
their network to help to grow Etihad.
3. Increased Fleet
In 2016, Jet shifted its international base from Brussels to Amsterdam and
signed an ‘Enhanced Cooperation Agreement’ with codeshare partners Air
France and KLM Royal Dutch Airlines in November 2017.
At this point Jet increased from four aircrafts in 1993-94 to 119 aircraft, from 12
destinations back then to 65 destinations and from 24 daily flights in 1993-94 to
over 650 departures and arrivals.
4) Promoters Interference in Final Decisions

In the later stages, Jet’s promoters, particularly Naresh Goyal, refused to relent
or cede control believing instead that he would take the correct decision as
always. But he couldn’t as Tata Sons, the only suitor with a comprehensive offer
to invest in Jet, walked off never to return.
Jet’s fall can be attributed as the fall of its founder. Very few business failures
have been so inseparable from the failings of their promoters. Goyal was
famous in industry for saying things like, “I am the person in Jet, when people
look at Jet Airways, they look at me”. Founder Naresh Goyal who was once
admired as the airlines biggest asset did somehow prove to be its biggest
liability.
Even with Etihad on board, Goyal repeatedly flirted with Delta Air Line , one of
the potential stake buyers. The FY18 net income of Delta was close to $4 billion
along with annual cash flows of over $7 billion and almost no presence in the big
Indian market, Delta would have saved Jet from the crisis. It offered Rs 300 per
share. But Goyal wanted over Rs 400. All this was being done when his airline’s
shares price had hovered between Rs 182 and Rs 347 for the past six months.
5) Continuously Incurring Losses:

Jet Airways posted a net loss of Rs 1,036 crore in March 2018 quarter, then a
net loss of Rs 1,323 crore in June quarter, then a net loss of Rs 1,297 crore in
September quarter and further in December quarter, a net loss of Rs 587.77 cr.
6)Delayed Salaries of Employees
Jet defaulted on payment of salary to its senior management in addition to
pilots, engineers and other employees as well.
The airline could not pay the salaries to pilots, engineers and senior
management on time since August 2018. All employees were unpaid since
March 2018 while pilots, engineers and senior management had not been paid
since January 2019.
As of Jan 2019, the firm had not been paying salaries on time to about 15% of
its over 16,000 staff since August 2018. This resulted in more and more flights
being cancelled as pilots call in sick. The airline also closed services across
seven Gulf routes. Up to 40 flights a week were cancelled. There had been
instances of irresponsible behaviour from the employees for example 30
passengers on board its Mumbai-Jaipur flight complain of nose and ear bleeding
after its crew had failed to activate the aircraft's internal pressure control.
7) Restructuring under the provisions of RBI

In February 2019, Jet's Board of Directors considered and approved a Bank Led
Provisional Resolution Plan (BLPRP), which was estimated to fill a funding gap
of around Rs 8,500 crore (which included proposed repayment of aircraft debt
amounting to around Rs 1,700 crore). This would mean that the lenders would
become largest stakeholder in the company.
8) Naresh Goyal Stepping Down

Naresh Goyal stepped down as chairman and from the board of directors on
March 25. His wife Anita Goyal and Etihad’s nominee also stepped down from
the board. Banks announced funding support of up to Rs 1,500 crore by way of
issue of debt instrument against the security of its assets
Shares of Jet Airways surged nearly 13% to ₹254 on BSE the same day.
9)The bidding process

The bidding process was initiated by lenders for finding a new investor(s) and
the process was expected to be completed in June quarter. Lenders then invited
EOIs for 31.2-75 percent stake in the airline in April. Goyal also puts forward an
EoI. Other bidders included Indigo Partners, Etihad Airways, TPG Capital and
NIIF.
10)Shutdown of Operations
Jet Airways had initiated the process by grounding fleet by a dozen since Feb as
it was unable to pay lease rentals. Lenders also refused to provide immediate
funding to the airline. CEO Vinay Dube writes to banks for emergency funding of
Rs 1,000 crore but doesn’t get a response. From a fleet size of 119 in Jan, the
airline’s active fleet size came to 5 in April and ultimately it suspended
operations for an interim but indefinite period on Apr 17.

Jet TIMELINE

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Jet TIMELINE

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Timeline of Events

1. Acquisition of Air Sahara:

2. Alliance with Etihad

4) Promoters Interference in Final Decisions

5) Continuously Incurring Losses:

7) Restructuring under the provisions of RBI

8) Naresh Goyal Stepping Down

9)The bidding process

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