Who failed Jet Airways’ 20,000 employees—owners or banks?

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On April 26, Shailesh Singh (52), who was undergoing cancer treatment, died after falling off a building in Mumbai’s Nalasopara. Police suspect Singh, who worked with Jet Airways as a technician for about 23 years and was on leave without pay for over a year due to his ailment, committed suicide.

According to Singh’s family, he was suffering from severe depression due to his treatment. His savings had drained and his only other hope, his son, was also caught in financial trouble as he is also employed with the now-grounded Jet.

Singh’s son, who works with Jet’s engineering department, has not been paid for the past two months.

This is the story of just one of the thousands of families battling financial troubles due to the grounding of Jet, even as the airline’s leadership is busy passing the blame on lenders for not releasing funds for salaries.

With non-payment of salaries for around three months, the news of Jet temporarily shutting operations from April 17 has come as a rude shock.

On Saturday (April 27), over 20,000 Jet employees, and the National Aviator’s Guild (NAG), which is a representative body for pilots of crisis-hit Jet, appealed to prime minister Narendra Modi to direct the airline’s lender, State Bank of India, to release at least one month’s salary. The guild also sought government’s directive to stop de-registration of Jet’s aircraft, which are now being leased by other domestic rivals.

“We don’t want to see a repeat of the human tragedy which unfolded post the Kingfisher Airlines demise,” NAG president Karan Chopra wrote to Modi.

Shifting the blame

On April 23, Jet CEO Vinay Dube wrote an email to employees where he blamed the banks for the current plight of the employees. Dube said that Jet’s leadership has tried to convince its lenders to release some funds for salaries, but their request has been turned down. Dube added:

While on the one hand, we are being told to preserve the value of Jet Airways during the bid process, on the other hand, with no salary payment, some of our colleagues, who are the very fabric and value of this airline, have no choice but to find employment elsewhere. When we highlight the disappointing irony of this situation to the lenders, we are simply told that this problem is to be addressed by the company’s shareholders, who should and could have agreed on a Resolution Plan a long time ago.

Separately, there have been considerable deliberations in the various Board meetings regarding the availability of emergency funding from the Promoter and Strategic Shareholder for payment of salary arrears, with no favourable outcome. We have, as a unified Jet Airways team, also approached the Government at the highest levels to seek intervention and assistance in our situation and that too has not yielded positive results thus far.

Dube’s remarks are ironic given Jet’s staff hasn’t received salaries since much before the bank took control of the airline.

However, experts say, Dube’s comment is not completely unjustified.

“The idea of letting the consortium of banks help was to ensure the airline does not sink and this was made public in several statements issued by SBI who led the consortium of lenders. I find it baffling that the banks could not give funds to the airline when it desperately needed to retain back its fleet,” Mark Martin, founder and CEO of aviation consultancy Martin Consulting, told Quartz. “Clearly, it (the lenders’ takeover) was not an intent to do a garage sale of Jet Airways as that would not have yielded much.”

In the current situation, employees are left with no option but to wait until May 10 when the current round of bidding ends, and a likely buyer may be announced.

But even then, it’s pretty unclear what Jet may be able to fetch given that the airline has been out of action for over 12 days now.

“Unfortunately, the delay has wiped out Jet Airways’ value,” Martin said. “With mounting debt that wasn’t restructured, which at the moment is in excess of the value with starting a new airline in India, it makes absolute commercial sense for an investor to start a new airline instead of buying into Jet Airways. Jet has nothing left to offer and if anybody is fully responsible for the fiasco, it’s the lenders.”

Now it looks like Jet’s employees are staring at an uncertain future with the hope of a miracle.

view Quartz
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