The weather has been stormy for Jet Airways after it posted a loss of Rs 10,400 million for the last quarter of 2018. With no foreseeable commitments, Jet boss Naresh Goyal is beginning to lose his sunshine over the fog. Multiple signs have hinted towards the company’s failure including intense competition from Low-cost carriers (LCCs), management failure, puny fleet acquisition, feeble nexus, and tangled partnerships.
Etihad will not invest
Jet Airways, once India’s premier private airline has now crashed down terribly with no rescuers in sight. However, the second-largest shareholder and an old friend of Jet Airways, Etihad Airways have been holding rescue talks with bankers of the indebted Indian carrier.
Initially, Etihad considered raising its stake above the 24 percent mark that it acquired in 2013. However, after the recent crash, Etihad offered to invest in the debt-laden airlines at a great discount. Etihad Group CEO Tony Douglas wrote a letter to SBI Chairman Rajnish Kumar declaring the company’s will to restructure the airline.
Etihad said it would only invest in Jet Airways at Rs 150 per share and disagreed to pledge any additional shares to raise money for the carrier as per CNBC TV-18. The news is a setback for the ailing carrier which had Rs 8,052 crore of debt on its books as on September 30.
After Nikos Kardassis, ex-CEO of the carrier stepped down in 2018, shares of Jet Airways sank over 4 percent crippling its position on the Dalal Street. The share has lost 6 percent in 2018, taking its total losses close to 68 percent. Analysts warned traders not to get swept away by heavy news flow on the counter. Additionally, the wave of failure that has sustained over the last year has enraged stakeholders who wish to see a change in the company’s leadership.
The Government won’t intervene
Jet Airways has also failed in providing salaries consistently. The retrenchment of employees has also added fuel to the fire. Civil Aviation Minister Suresh Prabhu clarified that private airlines must deal with their issues themselves and the government’s role can only be at the policy level. This has indeed shaken Jet Airways as soaring oil prices and the depreciating value of Indian rupee have already diminished profit margins significantly.
Struggling to keep itself adrift in the wake of a grim financial play in the last three quarters, Jet Airways is retreating its flight services on as many as seven Gulf routes. Also, it has scrapped off free meals for domestic class passengers. The International Air Transport Association (IATA) has been “monitoring” the situation of the crisis-ridden Jet Airways but feels that the specific problems of an airline need to be solved by specific measures.
Tata to the rescue?
In November 2018, a representative from the Tata Group said that the company had “preliminary” talks with Jet Airways but no specific proposal was made. Acquiring Jet Airways business could give Tata Group’s fledgling aviation unit a shot at ruling the fastest-growing major air-travel market, however, Tata’s interest in the deal has been flickering and the hopes for Jet Airway’s revival is diminishing.
While Jet Airways celebrated the joy of flying for decades in India, the turbulence loaded journey in the last one year has everyone speculating their next move. However, the resignation of Goyal seems likely with time after he finally agreed to resign if he receives a ‘fair price’.
Sources: ET, TOI, Business Today, Business Today
Image Credits: DNA India