Jet airways crisis




Jet airways crisis explained in brief –

-          Its 24 per cent owned by Abu Dhabi’s Etihad Airways 
-          Owes  Rs. 8,000 crore to lessors, suppliers, pilots and oil companies
-          Lenders searching for new buyers

Reasons –

-          Buying of Air Sahara in 2006 for 500 million dollars
-          Underestimating the competition from - IndiGo, SpiceJet and GoAir as they were offering lower prices and better routes.
-          Naresh Goyal’s management style was questionable
-          Fluctuation in global crude oil prices
-          price-conscious Indian travellers refused to pay a premium for on-board meals and entertainment.

A group of lenders led by State Bank of India has proposed taking a 50.1 per cent stake for Re 1 through the issuance of 114 million new shares, a temporary structure would allow the airline to raise equity from investors, which in turn would alter the shareholding pattern.

Etihad, India’s National Investment and Infrastructure Fund will be the fresh investors beyond 114 m figure and Naresh Goyal will also pump in as much as Rs 7 billion.

The crisis puts the Modi Government in danger for the elections as it had promised jobs and is now seeing 23000 jobs at stake.

If Jet goes, and Air India is eventually shuttered, the world's fastest-growing aviation market will have just one full-service airline left, a collaboration between Singapore Airlines Ltd. and the Tata Group (Vistara).





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