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vadodara
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Jet Airways: reports cash running out

Fri Aug 03, 2018 4:16 pm

Jet Airways confident in prospects despite reports cash running out

https://in.reuters.com/article/jet-airways-costs/jet-airways-confident-in-prospects-despite-reports-cash-running-out-idINKBN1KO0EB?il=0

Dube confirmed that the company was in talks with employees and suppliers to cut costs. It was looking at sales and distribution, payroll, maintenance and fleet simplification for savings to create “a healthier and more resilient business”.


Jet Airways told the pilots the company is looking for working capital loans but banks want it to show a turnaround commitment, the source said, adding that salary reduction was part of the same issue.


Good for Dube to fundamentally alter Jet's cost structure. Besides payroll, good to see him going after maintenance and fleet consolidation not to mention pretending to be a 'hub and spoke' airline.
 
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binayak
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:26 pm

One more thing. Recently there were multiple articles saying that 9W might shut down in 60 days if cost cutting wasn't implemented. Let me make this clear that it was all puff pieces ghost writen by some local competitors (may be the blue one or the purple one).
The official statement regarding the same is here
https://twitter.com/jetairways/status/1 ... 60640?s=19
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TransWorldOne
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:31 pm

Maybe partner Delta could help them out? They are rolling in the dough at the moment.
 
EddieDude
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:35 pm

What percentage of the equity of the company is owned by EY? What is India's limit for foreign investment in commercial airlines?
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sabby
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:38 pm

EddieDude wrote:
What percentage of the equity of the company is owned by EY? What is India's limit for foreign investment in commercial airlines?

I believe it was recently relaxed to 100%.
 
Italianflyer
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:39 pm

It does make one wonder if this is another DL angel investor opportunity. Indian law caps foreign investment at 49%. The question is how much is enough capital to keep the company going in a reorg. DL ALPA would have a fit but that didn't stop other strategic investment.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:45 pm

TransWorldOne wrote:
Maybe partner Delta could help them out? They are rolling in the dough at the moment.


Not easy to help or invest an Indian business from outside in any legal way ;) ;) Etihad learned the hard way.

There is only one legal option
1) Borrow from Indian PSBs at very high rates (Worst option, they will drain your blood)

Few barely legal options
1) Overvalue to the company and sell stake at a premium. (Best option but very counter-intuitive)
2) SLB gimmick
3) Secret wire transfers from Macau, Maldives, Mauritius or Isle of Man.
Last edited by dtw2hyd on Fri Aug 03, 2018 4:47 pm, edited 1 time in total.
 
Kikko19
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:47 pm

Any Indian airline making money?
 
tonyban
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:50 pm

Kikko19 wrote:
Any Indian airline making money?


Indigo ? Vistara ?
 
BestWestern
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:55 pm

The longer that Air India is allowed to fly Bankrolled by the state, the weaker the entire Indian aviation industry is.
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kevin5345179
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 4:57 pm

and they just purchased 75 MAX at FIA18 .... good work .....
 
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binayak
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 5:19 pm

tonyban wrote:
Kikko19 wrote:
Any Indian airline making money?


Indigo ? Vistara ?

Vistara is not making money. It's" expected to do so "by 2020
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lightsaber
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 6:30 pm

tonyban wrote:
Kikko19 wrote:
Any Indian airline making money?


Indigo ? Vistara ?

Already noted Vistara is not *yet* making money. They plan to join the club of profit soon. Maybe... promised (ok, I'm an old skeptic).

Indigo was break even last quarter which (hopefully) should be the worst quarter of the year for them.

The issue for Jet is they had a *really* bad 1st quarter and all indications are a really bad 2nd quarter.

How is GoAir/Spicejet doing? I was under the impression both were turning up, but last quarter was brutal...
In my opinion one of the more brutal quarters in Indian Airline competition from the evidence we are seeing. I so wait for Jet's quarterly report, scheduled a week from today.
As well as Spicejet's and GoAir.


BestWestern wrote:
The longer that Air India is allowed to fly Bankrolled by the state, the weaker the entire Indian aviation industry is.

Agreed. It means there is no bottom in how low fares go to attract customers.
In this thread I've been asking for estimates of how much AI is losing, my best estimate is $160 to $200million per month, I would appreciate if others joined the other thread for their estimates:
My estimate based on prior expected losses, and adding: revenue declines (the "Monsoon madness" sales that were brutal this year), fuel, rupee decline (too many expenses in dollars/euros), and how Jet/Indigo did last quarter:
viewtopic.php?f=3&t=1383239

What matters is you have a large competitor, Jet's #1 competitor for international flying, who flies without regard to revenue thanks to state aid. This is hurting all private Indian airlines, but none more than Jet due to the international competition.

Although to be fair, at this time EY and QR are not behaving as rational competitors (as their losses note). QR isn't even pretending. This has to be hurting EK too, but both AI and 9W will take a hit in revenue by their attempts at remaining relevant. I exclude EK as ironically, during what would be the worst of the fare war, they *cut* capacity for runway work.

Dang EK has been lucky. Cannot expand capacity right before the oil price drop and thus regional market meltdown, avoiding a major strategy shift. They also avoided most of the worst of the price war between EY/QR/AI/9W due to runway work and having a good lock on premium traffic. It is always better to be lucky than good...

Unfortunately for 9W, they are in the thick of it. By Air India not having to react rationally (e.g., flying premium route with low premium load factors instead of returning aircraft), they get a double hit on the competition. 9W also seems to have lost a bit of their premium clientele, are there any statistics to confirm or deny this opinion of mine? Cest la vie.

Opaque finances are almost always worse than expected, in particular for subsidized companies. I really wish Air India was required to give quarterly updates on debt and losses. When officials are quoting CAPA's estimated losses and debt (52,000 crore, losing $85 million per month), we know things are worse...

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vadodara
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 6:32 pm

BestWestern wrote:
The longer that Air India is allowed to fly Bankrolled by the state, the weaker the entire Indian aviation industry is.


Especially true for Jet. They have been busy trying to replicate hubs where AI is concentrated. Perhaps less overlap now then in the past.
 
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binayak
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 6:58 pm

For 9W international operations has always been a prime source of revenue. If the routes are struggling to make money, it's due to their First Class section. The F takes up lot of space in their 77Ws . So much that at least 8 rows of Y with 32" leg room can be fitted. However F will go away within two years and J will be upgraded. So that will eventually reduce costs.
The main target of all these cost cutting is to reduce ex fuel CASK by 15% as against 3.23 in FY17 which they are trying to do. Even last quarter despite such results, ex fuel CASK had reduced. Fuel costs can be reduced with the help of modern aircrafts like 737max. This way current problems can be overcome and the airline can be turned around.
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MIflyer12
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 7:36 pm

Italianflyer wrote:
It does make one wonder if this is another DL angel investor opportunity. Indian law caps foreign investment at 49%. The question is how much is enough capital to keep the company going in a reorg. DL ALPA would have a fit but that didn't stop other strategic investment.


Delta has no need for equity stakes in money-losing businesses. If there isn't a clear (and government- and worker-approved) turn-around plan Delta should sit on its money.
 
vadodara
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 8:04 pm

MIflyer12 wrote:
Italianflyer wrote:
It does make one wonder if this is another DL angel investor opportunity. Indian law caps foreign investment at 49%. The question is how much is enough capital to keep the company going in a reorg. DL ALPA would have a fit but that didn't stop other strategic investment.


Delta has no need for equity stakes in money-losing businesses. If there isn't a clear (and government- and worker-approved) turn-around plan Delta should sit on its money.


Jet is not ‘govt owned’; govt has no role other than that of a regulator.

The worker part is indeed correct; in fact the headline of this thread.
 
Harshil9
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 9:55 pm

Jet have sent me and all other frequent flyer members an email stating that the financial situation is fine and that the reports are not based on true statements.

A copy of the email:

You might have read recent media reports questioning the sustainability of our airline. We have already clarified to the media that these reports are factually incorrect and malicious.

The Indian aviation sector is experiencing strong growth and Jet Airways is well placed to be a part of this growth story. We are committed to creating a growth-oriented and sustainable future for all our stakeholders. We will continue to expand our network, both domestic and international, and revitalise our guest experience. This will be augmented with the addition of 225 Boeing 737-MAX fuel efficient aircraft, 11 of which are scheduled to be inducted into our fleet this fiscal.

Despite the high growth environment, the aviation industry is currently passing through a challenging phase, given a depreciating rupee and the mismatch between high fuel prices and low fares. Needless to state that Jet Airways has been in existence for over 25 years and through these years, we have been successful in combating such business volatility.

Jet Airways will continue to accord the highest priority to safety, backed by our signature warm Indian hospitality and reputed award-winning loyalty programme.

Thank you for your continued patronage and support.

Regards,
Vinay Dube
Chief Executive Officer
 
727200
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 10:02 pm

They just ordered 75 more planes, wounder if Boeing will let them go and potentially Airbus comes in to give a bridge loan, or Boeing ups the ante and provides partial funding? My guess is Boeing will be involved to save the $10B order.
 
PlanesNTrains
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Re: Jet Airways: reports cash running out

Fri Aug 03, 2018 10:55 pm

727200 wrote:
They just ordered 75 more planes, wounder if Boeing will let them go and potentially Airbus comes in to give a bridge loan, or Boeing ups the ante and provides partial funding? My guess is Boeing will be involved to save the $10B order.


They have 225 MAX on order. I can’t imagine Boeing not trying to save this order were there an actual cash crunch.
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binayak
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 1:21 am

Harshil9 wrote:
Jet have sent me and all other frequent flyer members an email stating that the financial situation is fine and that the reports are not based on true statements.

A copy of the email:

You might have read recent media reports questioning the sustainability of our airline. We have already clarified to the media that these reports are factually incorrect and malicious.

The Indian aviation sector is experiencing strong growth and Jet Airways is well placed to be a part of this growth story. We are committed to creating a growth-oriented and sustainable future for all our stakeholders. We will continue to expand our network, both domestic and international, and revitalise our guest experience. This will be augmented with the addition of 225 Boeing 737-MAX fuel efficient aircraft, 11 of which are scheduled to be inducted into our fleet this fiscal.

Despite the high growth environment, the aviation industry is currently passing through a challenging phase, given a depreciating rupee and the mismatch between high fuel prices and low fares. Needless to state that Jet Airways has been in existence for over 25 years and through these years, we have been successful in combating such business volatility.

Jet Airways will continue to accord the highest priority to safety, backed by our signature warm Indian hospitality and reputed award-winning loyalty programme.

Thank you for your continued patronage and support.

Regards,
Vinay Dube
Chief Executive Officer


Yes even I got the same.
Thanks for posting it. Perhaps now we'll have the discussion based on true facts not puff pieces by competitors.
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Antarius
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 1:45 am

dtw2hyd wrote:
TransWorldOne wrote:
Maybe partner Delta could help them out? They are rolling in the dough at the moment.


Not easy to help or invest an Indian business from outside in any legal way ;) ;) Etihad learned the hard way.

There is only one legal option
1) Borrow from Indian PSBs at very high rates (Worst option, they will drain your blood)

Few barely legal options
1) Overvalue to the company and sell stake at a premium. (Best option but very counter-intuitive)
2) SLB gimmick
3) Secret wire transfers from Macau, Maldives, Mauritius or Isle of Man.


SLB is not a gimmick. It is a common and accepted technique. Not sure why that's so hard for you to get.

This isn't some Enron strategy.
2018: AUA CLT IAH HOU DFW COS DEN CLL ORD PEK PVG PHX SFO SJC OAK PHL YYC STL DTW HNL OGG JFK LGA EWR GIG GRU IGU CWB SDU MDW BOS IAD DCA PBI FLL MIA
 
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lightsaber
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 2:06 am

binayak wrote:
Harshil9 wrote:
Jet have sent me and all other frequent flyer members an email stating that the financial situation is fine and that the reports are not based on true statements.

A copy of the email:

You might have read recent media reports questioning the sustainability of our airline. We have already clarified to the media that these reports are factually incorrect and malicious.

The Indian aviation sector is experiencing strong growth and Jet Airways is well placed to be a part of this growth story. We are committed to creating a growth-oriented and sustainable future for all our stakeholders. We will continue to expand our network, both domestic and international, and revitalise our guest experience. This will be augmented with the addition of 225 Boeing 737-MAX fuel efficient aircraft, 11 of which are scheduled to be inducted into our fleet this fiscal.

Despite the high growth environment, the aviation industry is currently passing through a challenging phase, given a depreciating rupee and the mismatch between high fuel prices and low fares. Needless to state that Jet Airways has been in existence for over 25 years and through these years, we have been successful in combating such business volatility.

Jet Airways will continue to accord the highest priority to safety, backed by our signature warm Indian hospitality and reputed award-winning loyalty programme.

Thank you for your continued patronage and support.

Regards,
Vinay Dube
Chief Executive Officer


Yes even I got the same.
Thanks for posting it. Perhaps now we'll have the discussion based on true facts not puff pieces by competitors.

The piece came out a week prior to quarterly results and after a bad 1q. I fully expect all Indian airlines had a really bad quarter.

We will find out more on the 10th.
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
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binayak
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 2:40 am

lightsaber wrote:
The piece came out a week prior to quarterly results and after a bad 1q. I fully expect all Indian airlines had a really bad quarter.

We will find out more on the 10th.

So let's have further discussion after the conference call. Then we'll have proper analysis of jet's performance.
That will be much better than creating a thread on a unconfirmed facts.
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eta unknown
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 2:50 am

Internally they are still talking about international expansion so the end isn't near...
 
Antarius
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 3:09 am

eta unknown wrote:
Internally they are still talking about international expansion so the end isn't near...


That and you dont order 225 new aircraft if the end is months away. Especially for a company who doesnt have government bailout money to fall back on.
2018: AUA CLT IAH HOU DFW COS DEN CLL ORD PEK PVG PHX SFO SJC OAK PHL YYC STL DTW HNL OGG JFK LGA EWR GIG GRU IGU CWB SDU MDW BOS IAD DCA PBI FLL MIA
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 3:06 pm

It is funny pundits claiming AI demise is the silver bullet for all issues Indian aviation is facings. There is zero evidence to support that fantasy theory.

AI has a 12% market share, at best all other airlines will pick up 2% each. Worst case 6E will dump capacity, lower prices more aggressively and pick up 80% domestic market share

If AI goes out of business
ME3 will send gift baskets to MoCA and pick-up majority of international bilaterals,
Local carriers will send gift baskets to MoCA and get all slots for free at DEL, BOM and even $75 Million each LHR slots.
The Indian government has to beg 6E to start EAS routes or dole out lot more subsidies.
IAF managed VVIP fleet will cost a pretty penny to taxpayers.

6E is the one distorting Indian market with capacity dumping and price lowering, the only issue no one is folding.
 
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RobK
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 3:07 pm

Are those 225 frames on order direct or including lessors? They have a lot on order via lessors as well. For example their first 4 are all from GECAS and their 5th is from SMBC Aviation Capital. For clarity, these are lessor orders originally and not sale and lease back at delivery arrangements.
 
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binayak
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 3:26 pm

dtw2hyd wrote:
It is funny pundits claiming AI demise is the silver bullet for all issues Indian aviation is facings. There is zero evidence to support that fantasy theory.

AI has a 12% market share, at best all other airlines will pick up 2% each. Worst case 6E will dump capacity, lower prices more aggressively and pick up 80% domestic market share

If AI goes out of business
ME3 will send gift baskets to MoCA and pick-up majority of international bilaterals,
Local carriers will send gift baskets to MoCA and get all slots for free at DEL, BOM and even $75 Million each LHR slots.
The Indian government has to beg 6E to start EAS routes or dole out lot more subsidies.
IAF managed VVIP fleet will cost a pretty penny to taxpayers.

6E is the one distorting Indian market with capacity dumping and price lowering, the only issue no one is folding.


Completely agree with you.
Perhaps this post must be read by everyone who wants 6E to have the entire Indian aviation.
The best preparation for tomorrow is doing your best today
 
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binayak
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 3:31 pm

Bottom line is there isn't a cash crunch at jet airways. So to some extent the thread title isn't true. Jet airways is undergoing a major cost cutting and fuel prices are hurting it.
PR teams of 6E/UK seized this opportunity to tarnish the image of the airline and decrease the trust of investors in it. Well time will tell who achieves in the end and finally whose image is tarnished .
The best preparation for tomorrow is doing your best today
 
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Momo1435
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 3:33 pm

PlanesNTrains wrote:
727200 wrote:
They just ordered 75 more planes, wounder if Boeing will let them go and potentially Airbus comes in to give a bridge loan, or Boeing ups the ante and provides partial funding? My guess is Boeing will be involved to save the $10B order.


They have 225 MAX on order. I can’t imagine Boeing not trying to save this order were there an actual cash crunch.

Boeing is already financing a large part of the MAX order, 75 of the 225 are now on the Boeing order book listed as Boeing Capital. Jet will lease them directy from Boeing. Other parts of their 1st orders that were first placed directly with Boeing have also been ofloaded to commercial lessors.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 4:08 pm

Bulk of these will be replacements, so there will be no additional impact on cash flow.

Old frames cost less to lease but cost more on MX/MRO
New frames cost more to lease but cost way less to maintain plus give fuel efficiency and operational reliability, additional cost savings.

With a small seed capital, 9W will have no issue SLB these deliveries. Boeing and Delta will be able to help identify best lease deals.

I don't see 9W doom and gloom, I actually suspect both AI lease payment and 9W cash crunch stories are placed to distract something else. I wonder what it could be.
 
vadodara
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Re: Jet Airways: reports cash running out

Sat Aug 04, 2018 9:16 pm

binayak wrote:
Bottom line is there isn't a cash crunch at jet airways. So to some extent the thread title isn't true. Jet airways is undergoing a major cost cutting and fuel prices are hurting it.
PR teams of 6E/UK seized this opportunity to tarnish the image of the airline and decrease the trust of investors in it. Well time will tell who achieves in the end and finally whose image is tarnished .


Jet Airways told the pilots the company is looking for working capital loans but banks want it to show a turnaround commitment, the source said, adding that salary reduction was part of the same issue.


Quiet accurate; Dubey is trying to fix the long term viability. Needs cash to bolster the airlines position. Banks are asking for improvements.
 
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binayak
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 3:30 am

vadodara wrote:

Quiet accurate; Dubey is trying to fix the long term viability. Needs cash to bolster the airlines position. Banks are asking for improvements.


That's what any other airline will do to grow. BTW the thing you quoted saying jet wasn't able to take working capital loans etc etc haven't been comfirmed by the airline. So there is a good chance for that news to be media made along with the news about shutting down in 60 days.
Dubey is indeed trying his best to get a airline back its mojo. I hope he's successful.
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neomax
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 8:35 am

lightsaber wrote:
tonyban wrote:
Kikko19 wrote:
Any Indian airline making money?


Indigo ? Vistara ?

Already noted Vistara is not *yet* making money. They plan to join the club of profit soon. Maybe... promised (ok, I'm an old skeptic).

Indigo was break even last quarter which (hopefully) should be the worst quarter of the year for them.

The issue for Jet is they had a *really* bad 1st quarter and all indications are a really bad 2nd quarter.

How is GoAir/Spicejet doing? I was under the impression both were turning up, but last quarter was brutal...
In my opinion one of the more brutal quarters in Indian Airline competition from the evidence we are seeing. I so wait for Jet's quarterly report, scheduled a week from today.
As well as Spicejet's and GoAir.


Man, India's aviation industry sounds like the profitability equivalent of a dumpster fire. When did it get this bad?
 
rutankrd
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 9:02 am

Neomax it never was any better !

Indian Aviation is a shambles has been for just about ever .

A state airline that probably never made a bean in thirty years exists of GOI patronage. They can’t generate genuinely interest from anyone when they try to sell

An international aviation policy still routed in seat caps over frequency and real competition, yet open sky’s with the UAE sapping the is very sole out of Indian carriers.
Somehow it goes right over the head of ministers the fact that Emirates are simply laughing all the way to the bank on this , because each time Spice , Air India Express and Jet increase the local regional and generally low yielding migrant worker flights into Dubai, Sharjah and Abu Dhabi. Emirate continue to cream off more of the potentially profitable long haul traffic .

In the local vernacular GOI and the Indian Aviation Ministry couldn’t organise a p**s up in a brewery!
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 11:26 am

Hope Dubey knows the code language by now. When a PSB official asks to show improvement, he/she(PSB official) is looking forward to completing some home improvement project. Improving airline financials will not get loans in India. A couple of diamonds rings and a Rolex got $2Billion loans without any assets or collateral.
 
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globetrotter94
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 12:23 pm

dtw2hyd wrote:
It is funny pundits claiming AI demise is the silver bullet for all issues Indian aviation is facings. There is zero evidence to support that fantasy theory.

AI has a 12% market share, at best all other airlines will pick up 2% each. Worst case 6E will dump capacity, lower prices more aggressively and pick up 80% domestic market share

If AI goes out of business
ME3 will send gift baskets to MoCA and pick-up majority of international bilaterals,
Local carriers will send gift baskets to MoCA and get all slots for free at DEL, BOM and even $75 Million each LHR slots.
The Indian government has to beg 6E to start EAS routes or dole out lot more subsidies.
IAF managed VVIP fleet will cost a pretty penny to taxpayers.

6E is the one distorting Indian market with capacity dumping and price lowering, the only issue no one is folding.


If a cat fell off a balcony in India, airliners.net would find a way to blame it on AI, so this is hardly surprising...
6E, 9W, AF, AI, B6, BA, BI, CA, DN, IC, JL, KL, KU, NH, QR, SQ, TG, TK*, UA, VS
 
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Insertnamehere
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 2:12 pm

Air India really is not tying up any competition. Air India is not a cheap airline to fly on, many Western Companies (including mine) bar us from taking AI at all for Company travel. I have taken Jet and quite enjoy them. AI ties up very little in terms of growth. Their Slots? maybe. But the others have had great strides in terms of competing with Air India. As much as I would love Air India to have a turnaround story and be better in terms of everything they sadly need to be completely dismantled and cut in terms of their headcount and transformed from the bottom up.
 
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globetrotter94
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 3:52 pm

Insertnamehere wrote:
But the others have had great strides in terms of competing with Air India. As much as I would love Air India to have a turnaround story and be better in terms of everything they sadly need to be completely dismantled and cut in terms of their headcount and transformed from the bottom up.


And just which "others" would this be--the airline that is the topic of this thread which, just like AI, is also showing to be running out of money? Which has serially mismanaged its network, fleet purchase decisions, etc. etc. etc. since the 2000s even worse than AI? Also, clearly, the Government of India has absolutely no intention of "dismantling" or "cutting headcount" at Air India due to the fragile role the airline seems to have in propping up certain banks--even refuses to sell 100% of its stake in AI. So like it or not, AI is here to stay, backed by India's sovereign guarantee. 9W on the other hand, I'm not too sure about.
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EChid
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 4:17 pm

Insertnamehere wrote:
Air India really is not tying up any competition. Air India is not a cheap airline to fly on, many Western Companies (including mine) bar us from taking AI at all for Company travel. I have taken Jet and quite enjoy them. AI ties up very little in terms of growth. Their Slots? maybe. But the others have had great strides in terms of competing with Air India. As much as I would love Air India to have a turnaround story and be better in terms of everything they sadly need to be completely dismantled and cut in terms of their headcount and transformed from the bottom up.


Out of curiosity, on what grounds does your company ban use of AI? Safety? Cost?
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Insertnamehere
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Re: Jet Airways: reports cash running out

Sun Aug 05, 2018 10:36 pm

EChid wrote:
Insertnamehere wrote:
Air India really is not tying up any competition. Air India is not a cheap airline to fly on, many Western Companies (including mine) bar us from taking AI at all for Company travel. I have taken Jet and quite enjoy them. AI ties up very little in terms of growth. Their Slots? maybe. But the others have had great strides in terms of competing with Air India. As much as I would love Air India to have a turnaround story and be better in terms of everything they sadly need to be completely dismantled and cut in terms of their headcount and transformed from the bottom up.


Out of curiosity, on what grounds does your company ban use of AI? Safety? Cost?


Safety is what was told by my travel department. I took them when I went to India in February (short hop BOM-GOI-BOM mainly because timings were better than Jet or others for my flight back to the US via AUH on EY) and they don't seem unsafe but I much prefer Jet when I have to go out to India a couple times a year.
 
vadodara
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Re: Jet Airways: reports cash running out

Mon Aug 06, 2018 12:52 am

globetrotter94 wrote:
Insertnamehere wrote:
But the others have had great strides in terms of competing with Air India. As much as I would love Air India to have a turnaround story and be better in terms of everything they sadly need to be completely dismantled and cut in terms of their headcount and transformed from the bottom up.


And just which "others" would this be--the airline that is the topic of this thread which, just like AI, is also showing to be running out of money? Which has serially mismanaged its network, fleet purchase decisions, etc. etc. etc. since the 2000s even worse than AI? Also, clearly, the Government of India has absolutely no intention of "dismantling" or "cutting headcount" at Air India due to the fragile role the airline seems to have in propping up certain banks--even refuses to sell 100% of its stake in AI. So like it or not, AI is here to stay, backed by India's sovereign guarantee. 9W on the other hand, I'm not too sure about.

You are certainly correct in your assertion. In fact Dubey realizes exactly what you stated, AI is here to stay because of the political influence of its work force and privileges the ruling class is able to avail.

Which is what is precisely the focus of the news report (and this thread). 9W will run out of money unless it rationalizes it’s structure including wages.
 
JOYA380B747
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Re: Jet Airways: reports cash running out

Mon Aug 06, 2018 2:33 am

All I want to know at this moment is should I be worried about my upcoming trip (October) to US via bookings on 9W?
If it wasn't for AI and those money mongers sitting in the parliament, 9W would have been as big as SQ...:(
 
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binayak
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Re: Jet Airways: reports cash running out

Mon Aug 06, 2018 5:49 am

JOYA380B747 wrote:
All I want to know at this moment is should I be worried about my upcoming trip (October) to US via bookings on 9W?

Not at all. My suggestion just forget whatever you read in the news. It's just temporary cost cutting to combat fuel prices.
At least unlike kingfisher, they aren't cutting salaries of base level employees I. e. Less than 12lpa salary.
Mostly senior staff are being affected.
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lightsaber
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Re: Jet Airways: reports cash running out

Tue Aug 07, 2018 2:39 pm

Jet noted fares constant for two years with the price of jet fuel doubling. This is really hurting airlines without disciplined cost control:
https://www.msn.com/en-in/news/other/je ... ar-BBLywg0
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unrave
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 1:07 pm

There has been a lot of back and forth and circular arguments in this thread. This is my take on the issues at Jet:

High cost of operations
With its CASK at INR 4.63 (Q4FY18), Jet Airways' cost of operations is much higher than IndiGo and SpiceJet. The argument that an FSC can afford to have a higher CASK doesn't hold water, because:

Inadequate revenues to meet operational costs
Jet's latest RASK was INR 4.12 (QFY18). The airline loses INR 0.51 per ASKM flow. In Q4FY18 the capacity deployed was ~15bn ASKM and the airline made an operating loss of ~760 crore

In the absence of reserves, this loss needs to funded. However, there are two major issues with that:

Severely weakened BS
As on 31Mar18 the equity capital of 9W was negative INR 7140 crore. This restricts the ability of the airline to raise equity funding. Moreover NG's shareholding has come down to 51%, I doubt if he would be willing to cede further control

Weak balance sheet pushes up interest cost
Jet is rated by ICRA (Moody's India) at BB+ (IndiGo is rated AA). With such a low rating, 9W has to be dependent on high cost debt, which further impacts profitability. The last time Jet borrowed from the market (Rs 700 crore in Oct 15) it had to do at the interest rate of whopping 20.64%! The possibility of falling into a debt trap is very high.

The airline has to repay the following amounts in the next three years: FY2019 (Rs. 3,120.3crore), FY2020 (Rs. 2,444.5 crore) and FY2021 (Rs. 2,167.9 crore), which needs to be refinanced anyway.

The way out:
Reduce costs (duh), dilute equity, pray hard for oil price to fall.
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CaliguyNYC
Posts: 426
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 1:41 pm

Fares in India have to rise a bit. While I like Indigo, I think their massive capacity dump is also a bit destructive. To a degree every airline needs an area that they can make a profit. I am glad that AI and Jet built separate hubs in DEL & BOM respectively. Domestic tickets are just too cheap given oil prices. Part of me wishes the GOI would have a min fare on domestic flights (doesn't have to be high just stop the bloodbath). But the other part of me hates govt interference. India is complicated.

Btw if Jet is in so bad a shape, how are they launching BOM-MAN? Does anyone know if Jet's EU-India flights (other than LHR) are profitable?
 
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binayak
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 1:46 pm

CaliguyNYC wrote:
Btw if Jet is in so bad a shape, how are they launching BOM-MAN? Does anyone know if Jet's EU-India flights (other than LHR) are profitable?


The India EU flights are actually the ones keeping this airline afloat. In every investor presentation, they've said that int'l ops comprised major portion of their revenues.
In fact twice in 2017 , they made profits just because of int'l ops but lost money in domestic.
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juliuswong
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Re: Jet Airways: reports cash running out

Wed Aug 08, 2018 1:47 pm

Haven't been following Jet Airways for past few years, weren't they in trouble few years ago with same issue, as a result Brussels scissor hub was eliminated, A330 and B77W were leased out to many airlines and order was truancated and ntu some B737 and a 77W which is now flying with UAE Amiri Flight? Well back then KF was still around but now their actual local competitor is AI, yet they can't turn around after all these years. What happened exactly? Can't be all the LCC killing their business right? ME 3 must be rubbing their hands gleefully. And didn't they formed deep JV with DL and AF-KLM in recent years. Didn't this resulted in better financial and operational improvement??

Something is missing somewhere....
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