- May 2, 2019
- Posted by: admin
- Category: Eduction
Jet airways was known to be one of the Best and Leading airlines in India. The company has recently been in high amount of debt. the company and its employee are now facing the worst of all times. The workers on the company have now fallen under high debts and the company expects the government for needy investments in order to save the company from loss
Naresh Goyal the founder chairman of the company himself is out of his own company. Let us now understand the primary causes behind the loss in company.
The success story of the company along with naresh goyal is also very interesting. So, let us begin with the story.
After the death of his father, the financial conditions for Naresh Goyal’s family became worse. He wanted to study but the financial conditions did not allow him to proceed. In 1967 at the age of 18 he took a firm decision and moved to Delhi with an empty pocket from Patiala. At Connaught palace he started working with his grandfather in a travel agency. He barely earned 10 rupees every day that mean 300 per month. He worked there for approximately 5 years. He made many friends there who had contacts with south eastern Asia’s national and international airlines. During that period Goyal started working as a PR in Iraq airways and Ticket Counsellor and later as a Manager in Jordan Airways.
In between his job in 1973 he started his own travel agency after a deep analysis on travel problems faced by Indian Passengers. He named his travel agency as Jet airways. People mocked and made fun of the name by comparing it with airline company. But this did not break Goyal always replied that one day he would surely initiate his own airline company.
He finally launched his very own air taxi in 1991 in the form of Jet Airways. After the open air policy act passed by the Indian government. Jet Airways took the opportunity and finally launched his airlines. The company achieved many milestones.
In 2008 when the economy of India long with many other countries collapsed, many airlines had to face losses Jet airways also was one of them.
Goyal wanted to increase the market share of his company, he finally overtook Air Sahara in 500 Million Dollar, this deal was a big financial burden on his own Company. The market share of Jet airways was increased but the company faced continuous losses. One of the reasons behind this was, Air Sahar was cheapest airlines whereas Jet airways was costly because of its services. During 2011-2012 crude oil price became high due to which the company faced various losses.
The major cause behind the failure of Jet Airways was the other airlines like Indigo, Jet-Airgo etc which were available at a low price for the middle class people and had cheap and affordable services, this directly impacted Jet Airways.
In 2012 when the Indian government gave permission of 49% international investment. Goyal in 2013 sold 24% of the company shares to an Arab company Etihad Airlines it is said that the net worth of the shares was then 2058. Even after this goyal was not able to save Jet airways from Debt.
Tone of the reason behind this was that goyal never followed the advice given by professionals to him. In September 2018 the company came under the loss of 13,000 crores and debt of 8000 crores. Etihad airlines also reduced the rates of its shares. The company had to return the debt of 3120 crores. The company has to return the loan of 6000 crores by 2021.
Jet airways needed a minimum of 3000 crores to get back to its position. The international investor Etihad Airlines suggested to save the company but with condition. Etihad will would purchase 51% shares of the company and will be the legalized central control of Jet airways. Even Tata Suggested the same condition for Jet airways. But Goyal denied the same. Bank after Vijay Maliya’s case refused to provide Loan to Jet Airways.
As per the sources reliance might buy the shares of Jet but reliance itself is planning to sell off its share. What will actually happen depends completely on Destiny.