India’s Jet Airways had been largely controlled by minority shareholder Etihad for some time. Jet Airways JetPrivilege was even spun off as a separate business entity so that Etihad could exercise more control over and inject more cash into the combined entity without running afoul of foreign ownership rules.
However Jet became increasingly independent of Etihad as the Abu Dhabi-based carrier has pulled back from its international investments. They hired a Delta Senior Vice President as their new CEO. Then they announced a severing of ties with American as well as with Star Alliance airlines Turkish, Austrian, Lufthansa and Swiss, while becoming closer to Delta and its joint venture partner Air France KLM.
Two years ago it looked like Delta would take a 24% stake in the carrier, but rumors were they wanted more cash from Etihad to do it.
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Jet struggled as investor after investor looked at the carrier, considering the allure of a foothold in the challenging but large and growing Indian aviation market. No one bit. Jet ran out of cash, had planes repossessed.
And finally it is going to shut down as no one would make a bridge loan on the expectation that they’d just be coming back for more cash.
India’s embattled Jet Airways Ltd is set to temporarily halt operations from Wednesday onward after its lenders rejected the airline’s plea for emergency funds, three sources from inside the company said on Wednesday.
The airline, saddled with roughly $1.2 billion of bank debt, has been teetering for weeks after failing to receive a stop-gap loan of about $217 million from its lenders, as part of a rescue deal agreed in late March.
Their last flight is reportedly to be from Amritsar to Mumbai, Jet Airways 3502, taking off in about 2 and a half hours. However I’m also seeing that flight as cancelled.
The largest private airline of India, which had a fleet of over 120 aircraft, is being grounded amidst debts to lessors, fuel suppliers, pilots, and banks. There’s talk that this is ‘only temporary’ but once shut down airlines rarely start back up (and it’s pretty much never a good idea for them to). At most branding gets purchased out of the ashes and a new carrier with a new business model might operate under the old name.