How Jet Airways ran into turbulence

The Supreme Court on Thursday ordered the liquidation of Jet Airways under the Insolvency and Bankruptcy Code (IBC). The top court said the liquidation was in the best interest of Jet Airways’ creditors and employees.

After flying as a full service airline for 25 years, Jet Airways was grounded in 2019 due to escalating financial issues.

Since then, more than 20,000 jobs and money worth thousands of crores owed to lenders, vendors and passengers evaporated while awaiting an insolvency resolution.

Its largest lender, the State Bank of India, initiated insolvency proceedings against the airline before the National Company Law Tribunal (NCLT). The top court’s ruling concluded that the Jalan-Kalrock Consortium (JKC), the resolution applicant, failed to fulfill the conditions necessary to revive Jet Airways, making liquidation the only viable option.

Lenders had argued that JKC’s inability to inject the required capital left no possibility for the airline’s revival.

The inception

Founded by Naresh Goyal, the airline launched commercial operations in 1993. It was then backed by Gulf Air and Kuwait Airways, which together held 40 per cent stake in the airline.

At the peak of its operations, Jet had little over 120 planes. When the operations came to a halt due to mounting debt woes and unpaid salaries, the airline had around 16 planes.

Turbulent times

In 2007, Goyal acquired Air Sahara for around Rs 2,200 crore. Insiders attribute most of the airlines’ troubles to legacy issues.

The acquisition, which was meant to salvage Jet’s market share from the threat of an aggressive Kingfisher Airlines, may have boomeranged.

Costs were also piling up for Jet Airways on the international operations front. In addition to this, fare wars began among Indian airlines as low-cost carriers gained ground, and, to make matters worse, global oil prices shot up in 2008.

While fare wars took their toll, generally lower fuel prices in the 2015-2017 period kept Jet Airways going.

After mounting losses for over a year and a heavy debt burden, in April 2019, Jet Airways was grounded after the SBI-led consortium of banks rejected the carrier’s request for emergency fund infusion.

Insolvency resolution

Weeks after Jet halted operations on April 17, 2019, lenders sought an insolvency resolution process . On June 20, 2019, the NCLT admitted the insolvency petition filed against the airline. In 2021, Jalan Kalrock Consortium (JKC) emerged as the successful bidder of Jet Airways under the insolvency resolution process but persisting differences with the lenders resulted in the resolution plan remaining grounded.