Jet Airways Faces Major Financial Turbulence!

In a bid to revive their financial condition, Jet airways is looking to sell a part of its stake and has approached investment bankers to help them out.

India’s second largest airline, by market share, has been going through a rough patch as they have been left cashed strapped due to high fuel prices, rising competition and lack of expansion in the past 6 months.

The airline is looking to raise immediate cash and the stake sale may include Jet Airways founder, Mr. Naresh Goyal, offloading a part of the promoters share in the company. Mr. Goyal owns a majority stake of 51 percent in the airline while Etihad owns 24 percent stake.

Jet Airways has reported a loss of Rs 636.45 Crores in FY 2017, while its competitors SpiceJet and IndiGo Airlines registered a profit of Rs 566.66 Crores & Rs 242.37 Crores respectively.

The senior management team of the airline informed its employees in several face-to-face meetings that the carrier’s financials are in a bad shape and drastic measures need to be taken to cut costs. They have said the airline will not operate more than 60 days if these measures are not taken.

Apart from selling shares in the airline, Jet’s top management has pitched for a 25 percent cut in their staff’s (Including pilots) salary and a reduction in the number of leaves to reduce employee cost.

The airline held a meeting with their pilots in Delhi and Mumbai on 1^st & 2^nd of August for negotiating these terms. Jet Airways CEO Mr.Vinay Dube, EVP Flight Operations & Engineering, Mr. Nikhil Vaid and Chief People Officer Mr. Rahul Taneja, addressed the pilots.

This was followed by an open house discussion, for the proposed salary cut, with the representatives of the airline’s pilot union, National Aviation Guild (NAG).Currently, Jet Airways has 2,000 pilots and a workforce of 16,000 people.

Jet Airways is not the only carrier to be affected by intense cut-throat competition and rising fuel costs. Many domestic airlines have reported a drop in profits for the first quarter of this fiscal year.