Wednesday, October 03, 2018

Is Jet Airways going the Kingfisher way?

The similarity between the dead Kingfisher Airlines (KFA) and the present-day Jet Airways is quite telling. The story of the fall of a large carrier like KFA was not one-off. The aviation business is cyclical world over, which makes the airlines prone to bankruptcies in every few years. The recent developments at the beleaguered Jet Airways reminds of the troubled days at KFA six years ago.

KFA, which stopped flying in October 2012, is a case study for businesses on things that can possibly go wrong at a once-revered company. Though KFA never managed to report profits, the airline was able to garner substantial market share by disrupting the airline industry with its services matching that of a full-service carrier and fares comparable to low-cost carriers.

A couple of months before the Kingfisher Airlines went belly up; the carrier struggled to pay salaries to its 7,000-strong employees. In May, the airline had to cancel a bunch of flights - seems to be the final straw - after pilots reported sick to protest for non-payment of salaries. When the Vijay Mallya-controlled airline was grounded, it had an outstanding debt of Rs 7,000 crore, net losses of 754 crore, and a negative networth of Rs 12,919 crore.
03/10/18 Manu Kaushik/Business Today