Jet Airways: In a Tailspin

Over the last year, Naresh Goyal, known for his “ruthless passion” for his airline, has had to let go. Of a lot. Selling 24 percent of Jet Airways’ equity as well as a majority stake in its frequent flier programme which houses data about premium passengers. Selling slots at London’s Heathrow airport to Etihad Airways. Easing out his best friends Ali Ghandour and Vic Dungca from the board—both are airline industry men of global repute who had been by his side almost from the day he started Jet Airways. Sidelining or firing key staffers, including his wife Neeta, who had helped him steer the company through financial, regulatory and legal minefields—financial compulsions of the past few years made this move imperative. But these painful changes, made with the intent of staging even a semblance of recovery, have not restored Jet’s fortunes in any significant way. Financial year 2014 was in many ways the lowest point for what was once India’s most powerful service brand. Loss for the year is expected to be around Rs 2,000 crore. Till Q3, revenue fell 10 percent over the previous year and losses stood at Rs 1,514 crore. In its latest available results (Q3FY14), Jet recorded a (standalone) loss after tax of Rs 267crore, of which Rs 259 crore was from its domestic operations. Add the woes of subsidiary company Jet Lite (formerly Sahara Airlines), and the problem gets compounded. Jet Lite has negative net worth, and continues to make losses despite loans (Rs 180 crore till December 2013) from its stressed parent.
These numbers are chilling, but it isn’t yet time to pen an epitaph. However, there is certainly a cautionary tale to be told, deconstructing the tailspin that the 21-year-old airline finds itself in.
28/04/14 Cuckoo Paul/Forbes India

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Categories: Jet Airways Apr 2014