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January 2021

The strange case of the bankruptcy of Jet Airways: an analysis of the financial structure

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The bizarre case of Jet Airways bankruptcy: an analysis of the financial structure – Journal of Operational Risk





  • The overall risk to which companies are exposed in the market inevitably affects the financial structure.
  • The Altman Z-score and the Piotroski F-score are useful tools for predicting potential bankruptcy, and the Beneish M-score for predicting potential manipulation of profits as financial malpractice.
  • The case under investigation is the bankruptcy of Jet Airways.
  • The evidence that emerged from the analysis showed that there was no financial malfeasance, but problems with the connection between the business model and the financial model underlying the bankruptcy of Jet Airways.

The global aviation industry has changed very rapidly in recent years, mainly due to changing technology and business models. These changes have also impacted the industry in India, forcing Indian airlines to face new and unpredictable challenges, not always successfully. The bankruptcy of Jet Airways is a relevant but still “unsolved” example in this regard. We study the financial structure of the company, with the aim of understanding whether financial turmoil for an airline can be a precedent for predicting the risk of bankruptcy. A combined assessment using the Altman Z-score, Piotroski F-score and Beneish M-score emphasizes that financial instability functions as a predictor of bankruptcy (for Z– and F-scores) in the analyzed case, while excluding (through the M-score) the potential manipulation of profits as financial malpractice.

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