Jet Airways, India’s oldest private airline, decided to temporarily suspend all flights from Wednesday night as cash ran out and banks refused to give more money. It became the second major airline to shut down operations, even temporarily, this decade after Kingfisher in 2012.
“Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going. Consequently, with immediate effect, Jet Airways is compelled to cancel all its international and domestic flights. The last flight will operate today,” the airline said in a statement.
Jet said the decision was taken “after a painstaking evaluation of all alternatives that were made available to the company and after receiving guidance and advice on the same from its board of directors”.
While Jet had already been running a bare minimum number of 35-40 flights for the last few days, a total shutdown, even temporary, will significantly affect its value for potential investors that are participating in a bidding process to invest in the airline. Jet’s shares yesterday fell close to 20% on rumours of an imminent shutdown. It closed 8% down at about Rs 242 on Tuesday close. Markets were shut on Wednesday.
“History and our business dynamics prove that once an airline shuts down in India; it never does restart,” said Mark Martin, founder of Martin Consulting an advisory firm.