Even until last year, India’s Jet Airways was the country’s biggest privately owned airline with the biggest market share, and there was no doubt that the airline was going to continue on its growth path as the airline industry expanded in the country. However, the company’s massive debt burden finally caught up with it earlier this year and eventually, it had to suspend operations indefinitely as banks refused to give Jet and short term operational loan. In addition to that, the airline could not even attract a suitable takeover offer either, and now it seems that Jet’s top executives do not believe in the future of the company either, as many of them have started quitting. Some of the exits involve two of the senior executives at the airline; in addition to the chief executive officer and needless to say, this is a sign of the fact that the most important decision makers at the airline do not see any future in it.
The airline has collapsed under the burden of loans to the tune of $1.2 billion that it owes to banks and due to continued losses; it had failed to service that loan adequately. Flight operations started going awry earlier in the year as Jet could not make payments to key vendors and on the 17th of April last month, operations were stopped indefinitely. However, amidst all that, the banks had asked the airline to look for bidders who would be interested in a takeover, but until now no concrete offer has come through. As a result, it did not entirely come as a surprise that Chief Executive Officer of Jet Vinay Dube and Chief Financial Officer Amit Agarwal quit one after another. The ‘Chief People Officer’ of the company Rahul Taneja has also resigned according to a report in the leading Indian financial daily.
The State Bank of India, which has the biggest exposure to the airline’s debts, is in charge of the takeover process, but the bank has stated that they have only received conditional offers. Additionally, many of the offers are too low. An analyst at Ambit Capital stated,
This had to happen. Considering the kind of bids that have come in and the monetary value of those bids, it seems like it is too little. It was long expected that Jet would eventually shut down and I think now that’s coming to fruition.