Jet likely to be rescued

Jet Airways struggles to build consensus amongst its stakeholders. State-owned banks are likely to be directed to rescue the airline in face of April’s general elections.


Jet Airways is a major Indian international airline based in Mumbai. In October 2017, it was the second-largest airline in India after IndiGo with a 17.8% passenger market share. However, since November 2018, Jet Airways has outlined a negative financial outlook due to increasing losses. Burdened with a debt of over US$1 billion, Jet has delayed payments to banks, suppliers, pilots and lessors. Jet is currently operating only 41 aircraft, a third of its original capacity, a number that is likely to increase.


On March 19, 2019, Civil Aviation Minister, Suresh Prabhu asked for an emergency meeting to discuss potential practical issues with Jet Airways’ declining capability to meet its obligations.

Jet Airways’ pilots union has said that its pilots will stop flying from April 1 should Jet not have a rescue plan in place by March 31, including how it intends to pay its staff overdue salaries. This comes as the aviation regulator, the Directorate General of Civil Aviation (DGCA) announced that Jet will only operate 140 flights a day compared to an average of 650 flights a day in March of 2018.

Jet Airways is currently in talks with its biggest shareholder, UAE’s Etihad, and its lenders, a group of state-run banks led by the State Bank of India (SBI). However, talks have reached an impasse as the various parties struggle to reach a consensus. Reports suggest that the government will bail out the ailing airline. If this is the case, the state-run banks will be instructed to rescue the privately held airline in an attempt to salvage it from bankruptcy. Bankruptcy would certainly mean the loss of thousands of jobs right before an important general election for the incumbent Modi government.


Our assessment is that Jet Airways is unlikely to come to a consensus with its shareholders and creditors. We believe that should the current stalemate continue, the government will instruct its banks to rescue the airline in order to thwart the loss of thousands of jobs. We believe that Modi’s handling of the situation will be closely watched by the electorate given the projection of his party as an economic rejuvenator.