Jet Airways CEO Vinay Dube quits: With top executives deserting ailing airline, is there any hope left for its revival?

Is the resignation of three top executives at Jet Airways the last nail in the beleaguered airline’s coffin? On Tuesday evening, Vinay Dube, CEO, Jet Airways, Amit Agarwal, deputy CEO and Chief Financial Officer, and Rahul Taneja, Chief People Officer resigned from the company citing ‘personal reasons’.

Abu Dhabi-based Etihad Airways submitted its bid to acquire a minority stake in Jet Airways with a lot of riders that involved finding more investors, leaving little hope for the airline's survival.

"Etihad re-emphasises that it cannot be expected to be the sole investor, and that, amongst other requirements, additional suitable investors would need to provide the majority of Jet Airways' required recapitalisation," Etihad Airways said in a statement on 10 May, which was the last date for submission of bids.

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“This had to happen,” analyst Ronil Dalal of Ambit Capital told Reuters. “Considering the kind of bids that have come in and the monetary value of those bids, it seems like it is too little. It was long expected that Jet will eventually shut down and I think now that’s coming to fruition,” Dalal said.

Representational image. Reuters

The cash-strapped airline had temporarily suspended its operations on 17 April, after teetering for weeks saddled with over Rs 8,500-crore debt. Its total liabilities reportedly amount to around Rs 15,000 crore.

With the top level management throwing in the towel on Tuesday, it is now clear that there is no future for Jet Airways. Like rats quitting a sinking ship, the top management has left realising there is no future for the cash-strapped airline, said Kris Laxmikanth, chairman and managing director, The Head Hunters India—a CXO-level hiring firm.

Some analysts believe that the reason for the top executives to hang around almost a month after the temporary grounding of operations of the airline was the hope that there would be a new owner and they could continue. “There could be two reasons for the top level management to remain until Tuesday when almost all others left. Either they were asked to by the current management, or they had a game plan—both of which did not work, and they decided to parachute away from the airline of which not much remains anyways,” said the analyst.

Jet Airways, which once upon a time had over 20 percent market share, is today in a shambles. At its peak, Jet Airways had over 120 planes and hundreds of daily flights, including international services.

The picture is clear now. The sudden exit of Jet Airways' three top-level executives in a span of 24 hours leaves no hope for the airline's revival. “It is a serious situation and signifies lack of any hope for the employees who look up to the management for guidance and support among other things. However, given that the company was not operational in the last month, the resignations on Tuesday should come as no surprise,” said Amit K Nandkeolyar, Associate Professor at Indian Institute of Management, Ahmedabad. He said the resignation of the top executives would lead to loss of confidence among the shareholders in the airline.

A bankers' consortium led by State Bank of India (SBI) had invited bids for selling anywhere between 31 and 75 percent stake in the airline as part of the resolution plan for Jet Airways and received four initial bids from Etihad Airways, India’s first sovereign wealth fund National Investment and Infrastructure Fund  (NIIF), TPG Capital and Indigo Partners. TPG Capital and Indigo Partners are private equity firms.

The hopes for revival of the temporarily grounded Jet Airways received a major blow after all the shortlisted bidders, including its former strategic partner Etihad Airways, started to reconsider their decision regarding buying stake in the cash-strapped airline. The bidders did not turn up for buying the cash-strapped airline. “Why would anyone buy an airline and also its debt? If someone has the money to start an airline, why would the individual buy an existing company which is in the red,” asked Ajay Awtaney, founder of the Indian frequent-traveler website Live From A Lounge.

“The resignation of the top brass at Jet Airways signals that it is time to move on—for everyone associated with the airline. The banks did not want to write-off the loans and did what they could, but was it the best?” asked an analyst.

But, most aviation experts agree that the death-knell of the airline was rung when low-cost carriers flooded the Indian aviation space leaving a full-service carrier like Jet Airways floundering. By the time Naresh Goyal, founder, Jet Airways, woke up to that reality, it was too late.

India does not have an environment where the government understands the sector. Case in point: National carrier Air India which is in the red. The people who want to use planes for travel look for the cheapest available fares, and the airline or its brand value is not even factored in the chase for a cheap air ticket. The masses who want to use airlines are value-chasers, said Awtaney.

What's next for Jet Airways? Awtaney believes that with a conditional bid from Etihad Airways and reports of banks engaging with unsolicited bidders, the revival of Jet Airways seems to be bleak now. Or if the banks decide to go in for another round of stake sale, as some media reports have suggested.