Who is pushing Jet down the drain?

Lenders promised Rs. 1500 Crores funding to keep the airline flying. Then what went wrong?


  1. With no revival plans after multiple efforts Jet Airways stares at complete shutdown
  2. Jet’s lenders had promised Rs. 1500 Crore interim fund after the exit of Naresh Goyal
  3. But the consortium led by SBI only released Rs. 250 Crore and declined any further funds
  4. The reluctance of Banks resulted in sudden halt of operations; putting the future of 20,000 employees in limbo

Jet-planes-newsline-dkoding Jet Airways Planes grounded at the Chhattrapati Shivaji Airport, Mumbai on 18th April | Credits: WRVO

Debt-ridden and beleaguered Jet Airways halted all flight operations on the 17th of March. The decision to cease all operations due to lack of immediate funds to keep it afloat.

With debts piling on, the loss-making airline was grappling for the past several months to raise interim funds as well as a long-term plan.

In February, a consortium of banks led by SBI had stepped in with a promise to infuse Rs. 1500 Crores to keep Jet afloat. The lenders became the biggest shareholder in the company and demanded exit of Naresh Goyal from the board before releasing funds.

But after an initial infusion of Rs. 250 Crores, the lenders shied away from pumping further money into the airline. Reports say that the lenders were reluctant as the company was unable to bring substantial collateral to the table to support the loan.

What made lenders stop in their tracks?

The roots of Jet Airways troubles lay in the 2010 crisis when it encountered four back-to-back negative quarters. It had left Jet struggling for finances.

Jet was forced it to default on payments to all stakeholders (banks, lessors and even employees).

The Jet Airways’ board approved a debt-swap revival plan on 25th March 2019. Under the plan, the lenders would release the Rs 1,500 crore emergency loan in a complex deal.

But having released only Rs. 300 Crore. The lenders had initially cited procedural delays as the reason for delay in the interim funding.

With no liquidity, Jet couldn’t pay for fuel and shut shop

As a last ray of hope, the airline issued a plea to its lenders for Rs. 400 Crore in funds. But the lenders which include India’s biggest PSUs rejected the plea.

The airline was informed by SBI, on behalf of the consortium, that its request for critical interim funding had been declined. As a result, Jet Airways issued a statement which gave out the dreaded information:

“Since no emergency funding is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going,”

The SBI-led consortium is not on the same page

Unable to unanimously agree on the release of emergency funds, the 21-bank consortium is making efforts to find a new buyer for the airline.

But reports have emerged that there is disagreement among the banks. Some lenders are skeptical and believe pumping money into the troubled airline would be throwing good money for a bad investment.

A senior executive with a large public sector bank (PSB) which is a part of the consortium said:

“We can’t be wasting our money in a case which has already gone bad,”

Lenders like PNB, ICICI and YES Bank objected to the loan amid concerns over the operational dynamics of the airline currently burning cash (an estimated Rs. 21 Crore loss per day).

The lenders believe that in the current scenario where airline is losing trust among customers, lessors and oil marketing companies, loaning money would only add to the losses already incurred.

Jet-Funding-Newsline-Dkoding PNB, ICICI and YES Bank have objected to the interim funding, leading to halt of operations. | Credits: Hindu Businessline

The lenders decided to halt the airline’s operations until they finalize the new buyer.

The Investors are unhappy with the lenders

The SBI-led consortium had called bids from potential investors. They have narrowed down on four bidders – gulf carrier Etihad Airways, state-owned National Infrastructure and Investment Fund and private equity firms Indigo Partners and TPG.

The prospective buyers will submit bids by 10th May.

But the investors are wary of taking on the role of the largest investor. With net debts of Rs 8,500 crore and dues to lessors and vendors of about Rs 3,500 crore, Jet doesn’t appear an attractive prospect for an investor.

Potential investors have stated that they are only interested in a stake of not more that 20% of the airline’s debt. They have also heavily criticised the lenders for their unwillingness in releasing emergency loans.

Investors are now asking the lenders to take shave upto-80% of their Rs 8,500-crore debt.

An anonymous source from the investor end said:

“The investors are ready to provide funds. However, the lenders have made it overly challenging for any bid to work in the time frame required,”

The lenders are looking at the closure as an opportunity to accelerate the sale process but experts believe there isn’t adequate time for due diligence.

Jet Airways market value has been plunging since the shutdown. If no investor is found, it would result in a difficult step for the lenders who will have to forego the entire loan amount.

Jet-Lessors-Newsline-Dkoding Jet Airways has witnessed its fleet critically thinned due to non-payment to lessors. | Credits: Reuters

Market estimates believe Jet will require up to Rs 20,000 crore in the next three years to keep smooth operatives. It looks unlikely that such an amount will be pumped in immediately.

The Government’s plea fell on deaf ears too

Aviation Minister Suresh Prabhu directed the ministry’s secretary to review the matter. The government in March had asked the banks to step in and help the airline stay afloat with emergency funding.

But the lenders paid no heed to the plight of the airline and its employees.

Experts say these are bad signs for the airline

Undoubtedly the best way forward for the prestigious airline is to expedite the bidding process, find a serious investor and get rolling to work out the debts.

As per ICRA’s report, the airline had large repayments due in March to the tune of Rs 1,700 crores and further Rs 2,445 crore due in FY20 and Rs 2,168 crore due in FY21.

As per Jitendra Bhargava, aviation expert and former Air India official, Jet’s woes amplified with the confusion and delay in ex-promoter Naresh Goyal stepping down. But banks too carry the blame:

“The banks, too, did not have a plan ready; nor did they have the funding ready. They should not have created optimism if they weren’t going to be able to deliver.”

The government was keen to ensure the airline is afloat. The demise will result in hundreds of job losses and stagger the industry prone to paralysis in the country.

Jet-Employees-Newsline-Dkoding Jet’s sudden closure has put more than 20,000 jobs at stake

20,000 Employees left shocked and stranded

The sudden shutdown has left thousands of Jet employees gasping for breath. Many have been with the airline since its inception 25 years ago.

CEO Vinay Dube had released a letter to employees reiterating that the sale process will take time and show several more challenges. Asking employees to be realistic, Dube said:

“we don’t have an answer today to the very important question of ‘what happens to us employees during the sale process’.”

Ceased operations is a bad omen

Once India’s largest airline, Jet has posted losses in eight of the past ten years.

Experts believe halted operations might result in failure to find new investors to keep Jet flying. With every single day the airline doesn’t operate, it will lose its slots, staff and lessors. And with liabilities adding up, a potential buyer doesn’t know what he is buying.

This might make the bidding process fall apart.

The consortium of lenders includes banks like State Bank of India, ICICI Bank, IDBI Bank, Punjab National Bank and Yes Bank among others. The failure of the lenders to push in the Rs. 1500 Crore that they had promised has raised eyebrows.

If Jet Airways is unable to bounce back from the disaster, much of the blame should be taken up by the inability of the rescue team to come through on its promises.


  1. Lenders had cited procedural delays as the reason for delay in the interim funding, but then declined it all together
  2. Investors are now asking the lenders to take shave upto-80% of their Rs 8,500-crore debt.
  3. The SBI-led consortium couldn’t unanimously agree and decided to halt the airline’s operations and finalize the new buyer.
  4. Experts believe halted operations might result in failure to find new investors to keep Jet flying.

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