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Jet Airways Crisis: Latest News, Stories.

Jet Airways Crisis: Latest News, Stories.
Jet Airways



Down Fall of Jet Airways

First of all we should know that there is  already a debt of over Rs 8,500 crore on Jet Airways which Jet Airways not be able to clear till date.


Now, The whole matter arises after when the banks rejected the airlines request for emergency funding of Rs 400 crore on Tuesday 16 April. And all This happens because Jet Airways is not cleared the first loan and it's situation is become worst and so all banks are worried to give more money as a loan. And due to that they don't have to ground its Planes at least temporarily. But now it is completely closed.



Major Crisis

Now, after the rejection from banks Jet Airways management has asked the government to release Rs. 175 crore to Pay one month of salary to its Staff. And for that they want to kept  "Boeing 777" Planes as collateral. But government also rejected its request.



The Problem



The main problem for government is that the "Boieng 777" Planes which Jet Airways wants to keep as collateral is also not completely own by Jet Airways.



That Jet Airways had bought  this  "Boeing 777" Plane on loan. But recently it make this defaulted on a "loan of EXIM Bank" through which the aircraft were bought. And so this is the reason why Indian Banks are unable to treat the Planes as collateral.



EXIM  BANK

Export- Import Bank of India is a finance Institution In India, established in 1982 under Export - Import Bank of India Act 1981".  It is a catalyst and a key Player in the Promotion of cross Border trade and investment. It's Headquarter is in Mumbai, India.


How Much Money Does Jet Airways need to come back ?


Getting the grounded airline back in air and clawing back its lost market share, it will require at least Rs.700 crore. Instantly, Because, it don't have even money to buy fuels for its Planes. And, other than that, Jet Airways' engineers, Pilots and senior management have not been Paid salaries since January and the dues till march reportedly add up to Rs. 600 crore . So, total sum of money needed by Jet Airways is Rs. 7600 crore.


Who Can Rescue Jet Airways ?


Banks, already  burnt by king fisher Airlines in the Past means that Bank have left it to Potential investors to receive the airline by infusing fresh capital.


The lenders issued a statement saying that " the best way forward for the survival of Jet Airways is to get the bidding bids " from the investors that had submitted expressions of interest.

Parties who showed Interest 

Recently is media the name of reliance company is flashing that according to media reliance had showed a interest in it.

And the shortlisted bidders is:- Etihad Airways (which has already a very large Part of share in Jet Airways or we can say that Etihad is Jet's largest shareholder and it indirectly wants to become the only shareholder) and other are TPG Capital, Indigo Partners and National Investment and Infrastructure Fund (NIIF) - have been issued bid documents on April 16. However, if the airline may even land in bankruptcy court.


Reasons for Jet Airways collapse

Primarily due to UDAN scheme Indian Aviation market faced a strong growth rate in last  years that the  average yearly growth rate of 20 % which is among the fastest in the world.
But, Inspite of that companies are suffering due to some reasons:-

Reckless competition:- 

While it is true that fuel costs, which account for about half of the expenses of running an reckless competition is responsible for the sorry flight of the industry.

Low Margins:-

Margins in the airline industry are wafer- thin in the best of times and the combined effect of rising fuel Prices and the inability to Pass them on to consumers due to competition has Proved to ve a deadly cocktail.


Aviation Turbine Fuel 

High cost of "Aviation Turbine Fuel (ATF)" including the high tax and surcharges is also a major cause of destruction  of Jet Airways.  That Jet Airways mostly have international flights and so, it have to pay more (ATF) as compared to others.


Aviation on Industry crisis


This is not a first or single case of destruction of Aviation company due to aviation Tax. Before this many companies are also faced the same crisis and destroyed completely by (ATF) Tax.


That, it was in October 2012, when Kingfisher Airlines shut its operation after a strike by its employees.


Air Deccan and Air  Sahara are before the kingfisher Airlines shut its operations.
Share had a good product but was in a financial mess. Jet Airways bought the Sahara Airline for Rs 1450 crore and converted it to a low-cost carrier under Jet Lite brand .





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