India’s first privately owned airline, Jet Airways, has been struggling with debt and operational losses.
Now it may have a fresh problem: tax trouble.
“Income tax officials are conducting a survey at Jet Airways’ offices,” the airline said in a statement on Wednesday (Sep. 19), referring to procedures being followed at its premises in Mumbai and Delhi.
To be sure, a survey is not an “I-T raid” or “search.” Here tax officials check the firm’s documents, based on which they can question the company’s executives.
In Jet’s case, this is part of the I-T department’s probe into allegations of financial misappropriations at the airline. “Books of accounts are being verified to ascertain the nature of financial expenses that took place within the organisation,” a senior government official told Quartz on the condition of anonymity.
Tax officials are also reportedly examining the airline’s 2011 agreement with Godrej Buildcon, an arm of the Mumbai-based realtor Godrej Properties, to develop Jet’s 2.5-acre property in Mumbai’s prime commercial centre, the Bandra Kurla Complex.
Meanwhile, the airline may just have survived a nightmare involving one of its flights. Early in the morning today (Sept. 20), around 30 passengers on a Jet Airways flight from Mumbai to Jaipur reportedly suffered nose and ear bleeds due to low cabin pressure after the crew forgot to press a switch.
It’s not just the finance ministry that has trained its lens on Jet Airways. After financial discrepancies were found in its books, the ministry of corporate affairs, in August, issued a directive to probe Jet for allegedly siphoning off funds.
Now this latest probe could only worsen matters for the country’s second-largest airline by market share.
The journey so far
Jet Airways’ financials have been in the doldrums for some time now. After delaying the announcement of its first- quarter results by 18 days this financial year, on Aug. 27 it announced losses of Rs1,323 crore ($189.2 million) for the period, mainly due to rising fuel prices and a weakening rupee. Most expenses for airlines are dollar-denominated, entailing losses if the home currency depreciates.
The April-June period is Jet Airways’ second consecutive quarter in the red.
It is reportedly going through an acute cash crunch because of which its promoter, Naresh Goyal, is in talks to sell a part of his 51% stake. There are reports that Jet is also trying to cut down costs by trimming employee salaries.
However, while announcing its quarterly results, the airline put forward a turnaround plan to revive its fortunes. It said it planned to save Rs2,000 crore over the next two years by curbing expenses on maintenance, fuel rate optimisation, and loan costs.