And It Was All Yellow
The only chance for Jet Airways to survive is if the banks that now own it, act swiftly.
With the touchdown at Mumbai airport of flight 9W 2502 from Amritsar at 12.22 am on Thursday night comes to an end Jet Airways’ almost 26 years’ run that started with a Mumbai-Ahmedabad flight on May 5, 1993. An end as Jet Airways (India) Ltd, at any rate. With more than ₹8,000 crore of bank debts, and the failure to receive a stopgap loan of about ₹1,500 crore, Jet’s wings don’t seem only clipped, but shorn.
The writing was on the wall for more than a year. The airline was careening out of control with continuing losses and a severe cash crunch. Jet Airways’ former chairman and its largest shareholder Naresh Goyal could have easily found strategic investors keen on a majority stake and exited, saving the airline.
When it became apparent six months ago that the end was near, the Tatas were keen but with a condition: Goyal had to go. Blinded by ego and greed, Goyal walked away from the deal when he could have had an honourable exit, realised a good return for his equity, and saved the airline.
Businesses that are listed entities but run by business families quite often brazenly overlook the fact that though they may have controlling stake, their allegiance must be to the public that has invested in their stock, both ethically and by statute. It also makes for good business.
Sadly, independent directors, as in all such companies, rarely exercise their independence. The moment some of them do, they are shown the door. After all, they are appointed by the promoters, and not by the public whose interests they are sworn to protect. The Securities and Exchange Board of India (Sebi) must open its eyes to this practice and change the rules.
Finally, when most of Jet’s planes were grounded, with cash flows completely dried up and losses piling up by the day, the consortium of bankers led by the State Bank of India (SBI) moved in. On March 25, SBI chairman Rajnish Kumar, with an admirable understanding of the criticality of time and how the airline’s value may vapourise into thin air if things were further delayed, swiftly got Goyal to put in his papers and cede control.
Kumar announced that the bankers would take control by converting part of their debt into equity, and inject forthwith ₹1,500 crore cash to keep the airline flying. In such scenarios, competitors move in for the kill, taking away critical trained staff like pilots so as to ground the airline for good.
Kumar also swiftly announced two things: one, a focus on operations to stabilise the airline; and, two, invite bids within a few days and sell Jet to the highest bidder.
But the cash promised by the banks did not materialise. Trained captains started leaving. As is normal, those employees who are highly qualified get offers from the competition, and they leave without a thought to fend for themselves, thereby making a revival for the airline even more difficult.
Lessors began grounding the planes. And many de-registered aircraft to ‘fly them away’. The once great airline disintegrated pretty much overnight and lay spread-eagled with broken wings.
In the centre of the storm were the hopes raised by the banks that were dashed, and the earlier optimism simply evaporated. The banks are not on top of the situation. They are now finding out that it was far easier to remove Goyal from the picture than to run the airline.
SBI’s Kumar spoke eminent sense while deciding to lead the consortium and remove Goyal swiftly. But, today, he’s unable to take the entrepreneurial risk of pumping in ₹2,000-3,000 crore to keep the airline afloat, something that takes precedence over everything else, till legal technicalities and formalities are overcome before any auction. Such an injection would have got all the banks’ investments back and saved the airline and jobs.
The banks now own Jet Airways, not Naresh Goyal, and there’s no one leader in the airline who can decide and take entrepreneurial decisions and act swiftly — which is key to saving the airline from complete disintegration. The government, on its part, is perhaps understandably unconcerned. The ruling party is fighting elections anyway. The bureaucrats are helpless. Or indifferent, or both.
If Jet continues to fly into the future, the government, which owns the banks, would have recovered any losses from the banks through multiple perennial revenues — income-tax deduction of employees, other taxes, cesses and levies recovered from airports, fuel, spares, taxis, hotels, tourism, various ancillary businesses, etc. And, most importantly, GoI would have saved more than 20,000 jobs.
If the banks were not going to infuse funds anyway, did they have any business to remove Goyal? Could they have removed him and then presided over Jet’s funeral? Despite everything, Goyal would have had a better chance of pulling a rabbit out of his hat and save the airline, than the headless chicken situation that Jet now finds itself in.
There may still be an odd chance to save Jet Airways if the banks heed what Napoleon Bonaparte had said, ‘It’s a principle of war that when you can use the lightning, it’s better than cannon.’ Jet may have missed the flight, though.
Courtesy: The Economic Times (National)
- Swiftly (Adverb): Meaning: at high speed; quickly; without delay (तेजी से)
Synonyms: Apace, Briskly, Hastily, Abruptly, Post-Haste, Fleetly
Antonyms: Sluggishly, Tardily, Leisurely, Adagio, Larghetto
Example: The police must be able to react swiftly in an emergency.
- Shear (Verb) – Shorn (Past form): Meaning: have something cut off (वंचित करना)
Synonyms: Deprive, Bereave, Denude, Mulct
Antonyms: Indulge, Endow, Provide
Example: He was shorn of his home.
- Careen (Verb): Meaning: move swiftly and in an uncontrolled way. (चिना समझे िुझे काम करना, जल्दी करना)
Synonyms: Rush, Hurtle, Career, Bolt, Dash, Whizz, Zoom, Scoot
Antonyms: Creep, Crawl, Stroll, Plod
Example: Driver saw cement truck careen toward him.
- Apparent (Adjective): Meaning: clearly visible or understood; obvious. (प्रत्यक्ष, स्पष्ट)
Synonyms: Tangible, Perceptible, Evident, Manifest, Discernible, Palpable
Antonyms: Obscure, Vague, Indistinct, Mysterious
Example: Her unhappiness was apparent to everyone.
- Brazenly (Adverb): Meaning: in a bold and shameless way. (िेशमी से)
Synonyms: flagrantly, Blatantly, Unabashedly, Boldly, Fearlessly
Antonyms: Politely, Courteously, Discreetly, Suavely
Example: They brazenly tore up the contract, so we want to claim losses.
- Allegiance (Noun): Meaning: loyalty or commitment to a superior or to a group or cause. (चनष्ठा, वफादारी)
Synonyms: Fidelity, Fealty, Devotion, Troth, Obedience, Faithfulness
Antonyms: Disloyalty, Treachery, Infidelity, Fickleness, Duplicity, Perfidy
Example: Soldiers must swear allegiance to the country.
- Evaporate (Verb): Meaning: (of something abstract) cease to exist. (लुप्त हो जाना)
Synonyms: Disappear, Fade, Evanesce, Disperse, Vanish
Antonyms: Appear, Emerge, Materialize
Example: Hopes of achieving peace are beginning to evaporate.
- Eminent (Adjective): Meaning: (of a person) famous and respected within a particular sphere. (प्रख्यात)
Synonyms: Prominent, Illustrious, Distinguished, Preeminent, Renowned, Exalted
Antonyms: Insignificant, Inferior, Ordinary, Unknown
Example: We are expecting the arrival of an eminent scientist.
- Perennial (Adjective): Meaning: lasting or existing for a long or apparently infinite time; enduring or continually recurring. (चिरस्थायी)
Synonyms: Everlasting, Perpetual, Eternal, Enduring, Ceaseless, Persisting
Antonyms: Ceasing, Ending, Halting, Temporary, Ephemeral, Evanescent
Example: The film ‘White Christmas’ is a perennial favourite.
- Infuse (Verb): Meaning: fill; pervade. (भरना, व्याप्त करना)
Synonyms: Permeate, Suffuse, Imbue, Inundate, Permeate
Antonyms: Eliminate, Remove, Take Out, Divest
Example: Her work is infused with an anger born of pain and oppression.