Regular flyers and employees of India’s oldest private airline, Jet Airways, are now stepping in to rescue the temporarily grounded carrier.

A group of frequent flyers of Jet has approached the airline’s key lenders—including the State Bank of India (SBI) and ICICI Bank—with a buyout plan, the news agency IANS reported on May 05. The plan also involves the carrier’s staff, who have already expressed their willingness to buy out the lenders’ stake in Jet, similar to how United Airlines was taken over by its employees in the US in 1994. 

Regular flyers and employees of India’s oldest private airline, Jet Airways, are now stepping in to rescue the temporarily grounded carrier.

A group of frequent flyers of Jet has approached the airline’s key lenders—including the State Bank of India (SBI) and ICICI Bank—with a buyout plan, the news agency IANS reported on May 05. The plan also involves the carrier’s staff, who have already expressed their willingness to buy out the lenders’ stake in Jet, similar to how United Airlines was taken over by its employees in the US in 1994. 

A big goal of the buyout was to reduce costs by letting employees take management control. Shareholders of the UAL Corporation, United’s parent, approved the acquisition of a 55% stake by workers in the company in July 1994 under an ESOP plan. The move, however, was accompanied by drastic cuts in pay and other benefits of United’s employees.

The scheme worked well initially. But soon, matters took a turn for the worse.

A slumping economy and a costly bid to acquire US Airways in 2000 proved fatal to United’s financial health. In 2002, the airline, burdened with a $1-billion debt, filed for bankruptcy. With it, the airline’s ESOP era came to an end.

India’s Jet also risks going the United Airlines way, unless it can shed its past baggage. “Jet will only gain if the new buyer, even if employees take over, successfully overcomes the problem of legacy that the airline currently faces,” said Kinjal Shah, an analyst at the ratings agency ICRA.

But given their plight, the employees have their skin in the game, and it is natural for them to help Jet grow back its wings.