Possibly the highest rate of Insolvency claims in the year of 2019, the bankrupt status of jet Airways not only came as a shocker to the common public but also the aviation industry as Jet Airways seemed to have always managed their funds well in terms of profit. In 2019, almost 15 percent of flights did not fly and the majority of the grounded fleet included Jet Airways. 2007 onwards Jet Airways profitability went down.
The airlines lease aircraft, and 34 percent of the cost, airlines has fixed costs to pay even if the capacity is not full. Jet Airways fell into debt to fund two strategies to compete with cheaper airlines; it purchased 16 airplanes and fell into loss. In 2008 the increased financial crisis, and demand for airlines fell and fuel prices increase. The aggressive expansion plan backfired eventually; the carrier ordered 22 white body aircrafts which did not run well. This eventually led to the downfall of Jet Airways.
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Around Rs 24, 887 crores of claims were received by the resolution professional of the bankrupt airlines. Jet Air which was privately owned airline company by the ex Managing Director of the Jet Airways was rejected at the outset. Further various bidders have been provided with Expression of Interests. The major bidders in this process include Etihad and Hinduja Groups but their pointers were not met.
The total liabilities seem to surge with every passing day. Over 8,000 crore rupees is owed to the banks alone. In toto 16, 643 claims have been received. Only 33 claims have been accepted uptil now, most of them include financial creditors. In a recent judgment the claims of the employees and workmen have been accepted. The claims of the employees total to about Rs 1, 000 crore, the veracity of the claims are being checked for any kind of duplication.
The company was allowed to initiate insolvency process on 20 July 2019 order passed by the NCLT, Mumbai Bench. The same has been initiated under Section 7 of the Code. Wherein, Mr. Ashish Chhawcharria was appointed as the Insolvency Resolution Professional.
