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hohd
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Re: Jet Airways: reports cash running out

Tue Jan 22, 2019 4:00 pm

If Jet goes under, which airline/company would be in the best interest of Indian aviation. I think that is Vistara, which is another full service airline, this is a reasonable scenario. If Indigo is allowed to take over remainder of Jet assets (whatever they may be), we will have Indigo controlling more than 50% of the Indian market, which is not good for the aviation in India. Don't think GoAir or Spice are not in a position to take over any one.

Best case scenario is for EY to invest in Jet and Goyal continue in some capacity, even a ceremonial position.
 
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lightsaber
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Re: Jet Airways: reports cash running out

Tue Jan 22, 2019 4:10 pm

hohd wrote:
If Jet goes under, which airline/company would be in the best interest of Indian aviation. I think that is Vistara, which is another full service airline, this is a reasonable scenario. If Indigo is allowed to take over remainder of Jet assets (whatever they may be), we will have Indigo controlling more than 50% of the Indian market, which is not good for the aviation in India. Don't think GoAir or Spice are not in a position to take over any one.

Best case scenario is for EY to invest in Jet and Goyal continue in some capacity, even a ceremonial position.

The Indian market has shown a frugality that favors the ULCCs. The issue is too many Indian airlines were not focused on cost control band aspects customers will pay for.

Lightsaber
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 3:10 am

How limiting access to foreign Working Capital has affected Jet Airways
Over the years I have seen this sentiment being spouted a few hundred times here that the high rate of interest charged by Indian banks and the lack of access to foreign working capital is the main issue ailing Indian airlines in general and Jet Airways in particular. Is it actually the case? Let us look at the numbers.

As of 30SEP18 Jet Airways has working capital borrowings of about Rs. 210 crore. Its total debt was about 8000 crore. So WC borrowings were about 2.5% of the total borrowings. Hardly a significant amount.

On these WC borrowings Jet pays interest at the rate of 12.5% p.a. (not 15%). Over the first six months of this fiscal the WC borrowings have remained nearly constant so the interest outgo on these during this period would have been just Rs 13.5 crore!

Meanwhile Jet's total losses during the same period was Rs. 2620 crore.

If Jet had unlimted access to foreign WC they could have borrowed at around 7% and its interest cost would have been Rs. 7.5 crore. A grand saving of Rs. 6 crore. In other words, if RBI had allowed Jet to completely borrow WC from foreign banks, Jet would have posted a loss of Rs. 2614 crore instead of Rs. 2620 crore!

In conclusion, the effect of WC costs on Jet's performance was inconsequential.
 
avier
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 6:10 am

unrave wrote:

If Jet had unlimted access to foreign WC they could have borrowed at around 7%


And what about borrowings from Islamic Banking & Finance?
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 6:29 am

avier wrote:

And what about borrowings from Islamic Banking & Finance?

Islamic banks still charge interest, they just call it by a different name.
 
P1aneMad
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 9:17 am

Sorry if it is off topic but what are the benefits to Indian economy of ECB controls?
From an armature point of view they seem just to impose expensive loan conditions on Indian based companies but for some reason/s are kept in place..
Many thanks for any insight.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 9:27 am

P1aneMad wrote:
Sorry if it is off topic but what are the benefits to Indian economy of ECB controls?
From an armature point of view they seem just to impose expensive loan conditions on Indian based companies but for some reason/s are kept in place..
Many thanks for any insight.

The controls are in place to prevent a run on the currency. RBI has a long term vision of making the Indian currency fully convertible (i.e. removing such controls altogether) when India becomes a mature economy but that is some years/decades away. Most developing nations place some form control on ECBs
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 12:06 pm

P1aneMad wrote:
Sorry if it is off topic but what are the benefits to Indian economy of ECB controls?


Controlling ECB protects failing Indian banks and gives RBI the ability to manipulate forex reserves. In an open system, any bank can review 9W's finances and give WC loans at a rate they feel comfortable. Even with a D credit rating, 9W would be able to borrow at rates below what they are paying now. If the State Bank of India wants 15% and an Abu Dhabi bank wants to take a risk at 10%, 9W saves money. That option is completely off the table now.

This is not just 9W's issue, it is for every Indian carrier. One cannot compare aviation to a predominantly Rupee denominated sector.

There is another angle to this story. In the old days when only forex earners could spend forex, it made sense. Now Rupee earners are importing $5B+ worth of consumer goods a year. With increased forex inflow it was OK, but now the inflow is slowing and these consumer purchases can drain forex reserves. GoI is in a pickle. If they stop people buying toys on the internet they may get mad and may not vote, if they don't stop reserves may fall.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 12:14 pm

dtw2hyd wrote:
Even with a D credit rating, 9W would be able to borrow at rates below what they are paying now. If the State Bank of India wants 15% and an Abu Dhabi bank wants to take a risk at 10%, 9W saves money. That option is completely off the table now.

With the 5 cr that 9W will save every quarter from this option, all its operational issues will be solved, its losses reversed, and it will become the strongest carrier in India
 
VTORD
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 12:36 pm

blrsea wrote:

No negativity, just don't want more money thrown into company with same management expecting different results. As it is, banks have to take a haircut on their loans, no doubt about it. Only the quantum needs to be defined. I would personally be very happy if Jet survives. Not only will it save jobs, but its also the only FSC in India which has potential to really expand internationally and take the fight to EU/ME carriers. It needs some capable management and creative thinking to do that.

We have had enough with sinking thousands of crores into bottomless pit that is AI , and lost thousands of crores in Kingfisher. No need to repeat same with 9W. Let promoters put in their fair share and let a proper management be put in place to steer the ship.


You do realize my negativity comment was made in jest? But all good points. Agreed! As @unrave mentioned a few posts above, Lalaji needs to retire. I think Dubey can ingest some discipline in the 9W operational strategy.

hohd wrote:
If Jet goes under, which airline/company would be in the best interest of Indian aviation. I think that is Vistara, which is another full service airline, this is a reasonable scenario.
Best case scenario is for EY to invest in Jet and Goyal continue in some capacity, even a ceremonial position.

It will come down to how reallocation of Jet's slots is handled particularly at BOM. Vistara has minimal presence in BOM AFAIK. The best case scenario would be if Goyal continues only in a ceremonial capacity.
 
edealinfo
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 1:59 pm

And what kind of ceremonial role do you envisage for Lalaji? Ribbon cutting for new routes? A master at the political chess game won’t sit tight for long
 
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 2:39 pm

A nice but incomplete summary of Jet's saga:
https://mobile.reuters.com/article/amp/idUSKCN1PH0VB

Incomplete as it ignores known missed vendor payments and route cuts.

What amuses me is how many Jet denials of issues were true. It shows how much of a Zombie corporation Jet is.

Lightsaber
 
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 2:42 pm

[list=][/list]
edealinfo wrote:
And what kind of ceremonial role do you envisage for Lalaji? Ribbon cutting for new routes? A master at the political chess game won’t sit tight for long

Master? He bluffed and was called and now just refuses to show his cards while buying drinks for everyone from cash in the pot. Yeah... Bad poker analogy.

Either Goyal and family are sidelined, or Jet liquidated. He is a master of a past era.
 
bostrv
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 5:43 pm

hohd wrote:
If Jet goes under, which airline/company would be in the best interest of Indian aviation. I think that is Vistara, which is another full service airline, this is a reasonable scenario. If Indigo is allowed to take over remainder of Jet assets (whatever they may be), we will have Indigo controlling more than 50% of the Indian market, which is not good for the aviation in India. Don't think GoAir or Spice are not in a position to take over any one.

Best case scenario is for EY to invest in Jet and Goyal continue in some capacity, even a ceremonial position.


6E controlling 9W might not be too bad for the Indian Aviation Market. While much has been made of the geographical advantages of DXB/AUH/DOH, DEL/BOM/BLR/MAA etc arent that badly positioned either. If 6E controls 9W, their core market wouldn't just be the Indian domestic market - it would be the Indian domestic market, Europe/Gulf to S.E Asia, and in the future Africa - N. Asia/U.S. East coast to S. E. Asia etc. It would be better for Indian aviation to have 6E get that market, not EY.

6E has shown its gumption in competing as an underdog against all existing Indian carriers, since they were last to launch. They seem to know and follow international best practices adapted to the Indian environment.
 
JoeCanuck
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 8:40 pm

lightsaber wrote:
Either Goyal and family are sidelined, or Jet liquidated. He is a master of a past era.


This is the bottom line in the Jet saga...the only two options.

Nobody will invest in or loan a penny to Jet as long as Goyal has any significant control. Even he realizes that. We are watching the end game where he is frantically scheming on how to finagle the best deal for himself before he is usurped and Jet is finally wrested from his clutches.

My guess of the most likely scenario, is Etihad getting 49% ownership and effective control of Jet, and Goyal is either bought off or given a token share of the airline with absolutely no control over the business itself.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 10:58 pm

Jack Welch a decade ago explained the differences in how American Inc handles crisis vs India (and South America I think).

American management jumps ship and files Chapter 11 as soon as there are signs of trouble. Mgmt will be replaced, PE takes over, cuts it to bare bones and sells in pieces.
Indians (and others) work thru the crisis, management thrives in bringing a company out of a crisis, abandoning the ship is bad management quality.
Both approaches have pros and cons and may not make sense to others.
 
edealinfo
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 11:32 pm

Fair valuation of Jet:
Per Etihad Rs 160; per Naresh Goyal Rs 200, SEBI’s formula Rs 260; Indian stock market Rs 265. What are the latter two so off when it comes to fair value? Is this time for massive short selling the Jet stock?
 
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 11:56 pm

edealinfo wrote:
Fair valuation of Jet:
Per Etihad Rs 160; per Naresh Goyal Rs 200, SEBI’s formula Rs 260; Indian stock market Rs 265. What are the latter two so off when it comes to fair value? Is this time for massive short selling the Jet stock?

Whomever the buyer is determines the fair value.

If the stock market will raise enough, Jet is worth 265.
SEBI doesn't pay money, so their estimate is void.
If Goyal et Al. put up enough, 200.
Otherwise, the high bid is Etihad's 150.

It is about who fronts the money.

Short selling is very risky. I advise most people against it.

Lightsaber
 
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lightsaber
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Re: Jet Airways: reports cash running out

Wed Jan 23, 2019 11:59 pm

edealinfo wrote:
Fair valuation of Jet:
Per Etihad Rs 160; per Naresh Goyal Rs 200, SEBI’s formula Rs 260; Indian stock market Rs 265. What are the latter two so off when it comes to fair value? Is this time for massive short selling the Jet stock?

Whomever the buyer is determines the fair value.

If the stock market will raise enough, Jet is worth 265.
SEBI doesn't pay money, so their estimate is void.
If Goyal et Al. put up enough, 200.
Otherwise, the high bid is Etihad's 150.

It is about who fronts the money.

Short selling is very risky. I advise most people against it.

Lightsaber
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 12:40 am

Public probably own just around 10%=15% of 9W, so there will be no mass short selling.
 
edealinfo
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 2:42 am

dtw2hyd wrote:
Public probably own just around 10%=15% of 9W, so there will be no mass short selling.


Aditya Birla Sun Life AMC Ltd. owns 3.55% -- they should get out, NOW!
 
edealinfo
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 3:28 am

Sebi unlikely to give Etihad an exemption

Read more at:
https://economictimes.indiatimes.com/ma ... 665512.cms

The Securities & Exchange Board of India (Sebi) is unlikely to exempt Etihad Airways from making an open offer to minority shareholders of Jet Airways even as lenders led by the State Bank of India try to persuade the regulator to do so, said two people familiar with the matter. “The current regulations do not permit any such exemption,” said one person who is involved in the process. “The rules permit exemptions only for those companies that are being resolved under the bankruptcy ..
 
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lightsaber
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 2:42 pm

Looks like GoI subsidies, err... debt forgiveness is now being discussed, at least in the press.

https://www.thehindubusinessline.com/ec ... 6.ece/amp/

First, double bonus points for the article's Pride and Prejudice opening. So the way to fix Jet is merge with AI and somehow that is better?!? Oh, this is another billion USD check to write. I thought the GoI had better things to fund than an industry that can be funded privately?

Since neither can bring their costs down enough to meet the fundamentals of a business, how does this help? Minimum fundamental money:
1. Operating costs.
2. Overhead.
3. Advertising.
4. Capital funded at industry growth (20% in India).
5. Advertising
6. Some profit. This is the good times, so 6% annual profit is the minimum to service a moderate recession.

I also see with AI opperations that should be in opperations costs put elsewhere. So a merged entity is doomed to need further subsidy/capital infusions.

And who would the merged entity be loyal to? Star or Etihad/Skyteam? With the excessive fuel taxes at most Indian airports, alliance membership is critical to maintain a viable long haul network.

Lightsaber
 
edealinfo
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 9:00 pm

https://www.google.com/amp/s/wap.busine ... 427_1.hymn

Etihad wants to end exclusivity for jetprevildge
 
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lightsaber
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 9:19 pm

Edealinfo
For the money Jet needs, Etihad must insist on better terms. I wonder if the low-ball offer is a requirement for Etihad. As we say in my family, "She who has the gold, makes the rules."
Lightsaber
 
Kilopond
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 9:32 pm

Etihad itself has been running in a crisis mode recently.

https://www.reuters.com/article/us-etih ... SKCN1P41VH

To make things even worse, a Berlin court might order them to pay out billions to the Air Berlin debitors. For now, Ethihad filed a counter-trial at a London court as an act of desperation.

https://gulfnews.com/business/aviation/ ... 1.61619613
 
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lightsaber
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 10:02 pm

Kilopond wrote:
Etihad itself has been running in a crisis mode recently.

https://www.reuters.com/article/us-etih ... SKCN1P41VH

To make things even worse, a Berlin court might order them to pay out billions to the Air Berlin debitors. For now, Ethihad filed a counter-trial at a London court as an act of desperation.

https://gulfnews.com/business/aviation/ ... 1.61619613

Abu Dhabi has burned through too much in liquid funds. It is possible that they cannot save Jet except with Soverign borrowing and thus an extreamely high rate of return must be negotiated.

This shouldn't effect an Indian airline, but with Jet having to compete with Air India and Indigo, they were put in a bind during the oil spike last year. I'm not saying they were well managed, but when Indigo can make a profit, they can keep this up forever. Only Indigo's growth rate is at risk with their current level of profit and absolutely huge cash reserves.

Lightsaber
 
edealinfo
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Re: Jet Airways: reports cash running out

Thu Jan 24, 2019 11:27 pm

Shouldn’t sovereign borrowing or borrowing backed by the sovereign, carry a lower borrowing cost since the sovereign (UAE Govt) is highly unlikely to defaul
 
JoeCanuck
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 12:01 am

lightsaber wrote:
Abu Dhabi has burned through too much in liquid funds. It is possible that they cannot save Jet except with Soverign borrowing and thus an extreamely high rate of return must be negotiated.

This shouldn't effect an Indian airline, but with Jet having to compete with Air India and Indigo, they were put in a bind during the oil spike last year. I'm not saying they were well managed, but when Indigo can make a profit, they can keep this up forever. Only Indigo's growth rate is at risk with their current level of profit and absolutely huge cash reserves.

Lightsaber


While Abu Dhabi has deep pockets...they aren't bottomless. The price of oil is down again. They are spending billions fighting a war in Yemen. They have more pressing concerns than the life or death of Jet. That being said, I have no doubt they'd rather make some money on their investment and realize they would probably have to add to that, if they actually want to see eventual returns...which would have to come with effective control of the airline.

Of course, this is my 'outside looking in' perspective and with the nuances of politics in India being as complex and subtle as they are, I freely admit that there is much I am incapable of understanding.

Still...as I've said before...it is fascinating.
 
Antarius
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 12:16 am

lightsaber wrote:
So the way to fix Jet is merge with AI and somehow that is better?!?


Well, Swissair's hunter strategy failed. EY investing in Alitalia, Jet, Airberlin etc. failed. So third time must be the charm.
 
edealinfo
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 2:37 am

JoeCanuck wrote:
lightsaber wrote:
Abu Dhabi has burned through too much in liquid funds. It is possible that they cannot save Jet except with Soverign borrowing and thus an extreamely high rate of return must be negotiated.

This shouldn't effect an Indian airline, but with Jet having to compete with Air India and Indigo, they were put in a bind during the oil spike last year. I'm not saying they were well managed, but when Indigo can make a profit, they can keep this up forever. Only Indigo's growth rate is at risk with their current level of profit and absolutely huge cash reserves.

Lightsaber


While Abu Dhabi has deep pockets...they aren't bottomless. The price of oil is down again. They are spending billions fighting a war in Yemen. They have more pressing concerns than the life or death of Jet. That being said, I have no doubt they'd rather make some money on their investment and realize they would probably have to add to that, if they actually want to see eventual returns...which would have to come with effective control of the airline.

Of course, this is my 'outside looking in' perspective and with the nuances of politics in India being as complex and subtle as they are, I freely admit that there is much I am incapable of understanding.

Still...as I've said before...it is fascinating.


Are you aware that the UAE Sovereign wealth fund is worth $875 billion.....yes $875 billion................A $350 - $500 million investment by them in Jet in comparison is pocket change! But when they put that kind of money down without a thought, it usually is at the whims of the Royal Family (which is how Jet received its first investment from them via Etihad in 2013 / 2014.) This time around though, it is not the Royal Family, but the professionals at Etihad calling the shots and they can drive a hard bargain.
 
AngMoh
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 1:00 pm

Etihad has hired a turnaround specialist to perform due diligence on Jet Airways.

https://www.channelnewsasia.com/news/bu ... t-11167070
 
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lightsaber
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 3:22 pm

edealinfo wrote:
JoeCanuck wrote:
lightsaber wrote:
Abu Dhabi has burned through too much in liquid funds. It is possible that they cannot save Jet except with Soverign borrowing and thus an extreamely high rate of return must be negotiated.

This shouldn't effect an Indian airline, but with Jet having to compete with Air India and Indigo, they were put in a bind during the oil spike last year. I'm not saying they were well managed, but when Indigo can make a profit, they can keep this up forever. Only Indigo's growth rate is at risk with their current level of profit and absolutely huge cash reserves.

Lightsaber


While Abu Dhabi has deep pockets...they aren't bottomless. The price of oil is down again. They are spending billions fighting a war in Yemen. They have more pressing concerns than the life or death of Jet. That being said, I have no doubt they'd rather make some money on their investment and realize they would probably have to add to that, if they actually want to see eventual returns...which would have to come with effective control of the airline.

Of course, this is my 'outside looking in' perspective and with the nuances of politics in India being as complex and subtle as they are, I freely admit that there is much I am incapable of understanding.

Still...as I've said before...it is fascinating.


Are you aware that the UAE Sovereign wealth fund is worth $875 billion.....yes $875 billion................A $350 - $500 million investment by them in Jet in comparison is pocket change! But when they put that kind of money down without a thought, it usually is at the whims of the Royal Family (which is how Jet received its first investment from them via Etihad in 2013 / 2014.) This time around though, it is not the Royal Family, but the professionals at Etihad calling the shots and they can drive a hard bargain.

I said liquid cash. Yes, the sovereign wealth fund could be used as collateral for loans. The have used up too much of the liquid assets.

You are aware a nation must keep 3 to 6 months of GNP in ready cash, right? So not all of that fund is usable on a whim. The mid-East countries ramped up their economies to need $110+/ bbl oil to break even. Since oil is less, they are selling what they can for day to day opperations of the country plus Etihad's huge losses.

Everything I've read is they are having to discount their assets or borrow against them for ready cash. One cannot just turn $100 billion in ownership of corporations, land, and bonds into cash quickly.

Also recall a sovereign wealth fund is used to manage currency value. Is now the time to disrupt the currency? A few years ago, yes! Now, no.

Lightsaber
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 4:19 pm

Well, SBI forensic audit didn't find anything, I doubt turn around specialists will find anything.

It is a $3.5Billion/year revenue airline in a growing market. The well-run airline has only $3.6 Billion/year revenue.

EY would be unwise not to pick up more share. AAB said he would be happy to pick up 9W if UAE has no share in it.
 
avier
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 5:53 pm

dtw2hyd wrote:

EY would be unwise not to pick up more share. AAB said he would be happy to pick up 9W if UAE has no share in it.


Yeah, but the egomaniacs at EY are neither fully committed to saving 9W nor wanting to give it up fully to QR.

QR is the perfect fit for 9W. Buts it's sad they tied the knot with EY in 2013, with the one who had many wives and didn't actually care for any, and even has let some die.
 
VTORD
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 6:08 pm

avier wrote:
Yeah, but the egomaniacs at EY are neither fully committed to saving 9W nor wanting to give it up fully to QR.

QR is the perfect fit for 9W. Buts it's sad they tied the knot with EY in 2013, with the one who had many wives and didn't actually care for any, and even has let some die.

Why is QR the perfect fit for 9W?

So if wasn't the egomaniacs at EY, it would be the egomaniac at QR. Not to mention the egomaniac at 9W who won't let go. Eh?

Edit: @avier had to be Mr. Hogan yeah?
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 6:21 pm

It is possible EY and NG pushing 9W to the brink so PSBs will panic a take a bigger haircut, debt to equity or what.

Can someone explain what are EY's options if Swamy's conspiracy theory of EY indirectly owns 76% of 9W is valid? ie., NG is just a proxy? If this theory has any legs, why would EY pay again for something it is already a guarantor.
 
avier
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 6:21 pm

VTORD wrote:
avier wrote:
Yeah, but the egomaniacs at EY are neither fully committed to saving 9W nor wanting to give it up fully to QR.

QR is the perfect fit for 9W. Buts it's sad they tied the knot with EY in 2013, with the one who had many wives and didn't actually care for any, and even has let some die.

Why is QR the perfect fit for 9W?

So if wasn't the egomaniacs at EY, it would be the egomaniac at QR. Not to mention the egomaniac at 9W who won't let go. Eh?


Why is QR not the perfect fit for 9W ?

QR wanted to setup a full fledged FSC in India. They have deep pockets. They have shown their commitment to aviation by building a decent airline (unlike EY). They have made fair investments in other aviation groups like the massive IAG group and China Southern, which is a reflection of how they view and support aviation (unlike EY and their extremely poor investments of which some have gone bankrupt. ) By getting 9W they would get their Indian airline venture dream fullfilled.
Paying of 9W's debts and turning them around them around would be peanuts for them ( considering they could pick up 5% of China's biggest airline). 9W would get their suitable investor. Win win for both.
And yes, I agree the one ego maniac at 9W needs to go, but the airline should remain.

VTORD wrote:

Edit: @avier had to be Mr. Hogan yeah?


Was a random guess. So I was asking. Not like I expect anyone to exactly know. But he was President for long while then. I cant imagine it to be the Royal Family's genius idea.
 
P1aneMad
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 9:45 pm

Avier you seem to forget that neither QR nor any other FOREIGN entity is allowed to throw buckets of money at 9W.
Every contribution a foreign entity makes must be matched by an Indian partner and then some so that majority of shares and effective control of 9W remains in Indian hands.
The same principal is also true in the EU, the US and many, many other jurisdictions.

So AAB could only contribute just slightly less than Naresh Goyal and the other Indian shareholders would be willing to.
He could have advised NG differently presumably than Hogan.
But that far from guarantees that 9W today would have been in any better shape than it is.
 
edealinfo
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 10:06 pm

P1aneMad wrote:
Avier you seem to forget that neither QR nor any other FOREIGN entity is allowed to throw buckets of money at 9W.
Every contribution a foreign entity makes must be matched by an Indian partner and then some so that majority of shares and effective control of 9W remains in Indian hands.
The same principal is also true in the EU, the US and many, many other jurisdictions.

So AAB could only contribute just slightly less than Naresh Goyal and the other Indian shareholders would be willing to.
He could have advised NG differently presumably than Hogan.
But that far from guarantees that 9W today would have been in any better shape than it is.

So, who will be EY’s partner if they have to pick 49 percent in Jet?
 
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unrave
Posts: 2682
Joined: Tue Jan 06, 2015 6:37 am

Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 10:17 pm

dtw2hyd wrote:
Well, SBI forensic audit didn't find anything, I doubt turn around specialists will find anything.

It is a $3.5Billion/year revenue airline in a growing market. The well-run airline has only $3.6 Billion/year revenue.

EY would be unwise not to pick up more share. AAB said he would be happy to pick up 9W if UAE has no share in it.


With $700m in annual losses, $1.1b debt and a negative equity of a few billion $, nobody is touching Jet with a a ten ft pole. EY is original investment is worth less a third by market valuation and less than a fourth by its own valuation, so I can see why it is hesitant to flush more money down the drain
 
P1aneMad
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 10:47 pm

edealinfo wrote:
P1aneMad wrote:
Avier you seem to forget that neither QR nor any other FOREIGN entity is allowed to throw buckets of money at 9W.
Every contribution a foreign entity makes must be matched by an Indian partner and then some so that majority of shares and effective control of 9W remains in Indian hands.
The same principal is also true in the EU, the US and many, many other jurisdictions.

So AAB could only contribute just slightly less than Naresh Goyal and the other Indian shareholders would be willing to.
He could have advised NG differently presumably than Hogan.
But that far from guarantees that 9W today would have been in any better shape than it is.

So, who will be EY’s partner if they have to pick 49 percent in Jet?

It will have to be an Indian entity.
Who exactly is willing to do that none of us here knows.
 
edealinfo
Posts: 2784
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 11:11 pm

Read more about New plan for Jet's recast on anvil; Naresh Goyal's stake may go below 20%. Etihad Airways, which holds 24% in Jet at present, may up its stake to close to 40% in the airline; EGM scheduled for February 21

Does anyone have access to Business Standard newspaper in which the above story appears today? If so, could you summarize it for us?
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Fri Jan 25, 2019 11:23 pm

P1aneMad wrote:
...
It will have to be an Indian entity.
Who exactly is willing to do that none of us here knows.


Last year India changed rules to allow 100% FDI in aviation, 49% max by a foreign airline, no automatic approval(whatever it means), rest can be a sovereign fund or private equity. So QR and Qatar sovereign fund can structure the transaction.

At INR 265 Qatar/QR can pick up the whole company, not an issue.

After QR's hypothetical takeover, problems will start because they cannot bring working capital, again hypothetical QR owned 9W has to go to an Indian PSB.

This is a vicious cycle and no way to get out.
 
edealinfo
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Re: Jet Airways: reports cash running out

Sat Jan 26, 2019 12:34 am

This is the latest on the Jet saga.......

New plan for Jet's recast on anvil; Naresh Goyal's stake may go below 20%
https://www.business-standard.com/artic ... 436_1.html

Can someone who has access to Business Standard summarize the article in the link (it is behind a paywall).
Thank you.
Thanks.
 
edealinfo
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Re: Jet Airways: reports cash running out

Sat Jan 26, 2019 12:38 am

dtw2hyd wrote:
P1aneMad wrote:
...
It will have to be an Indian entity.
Who exactly is willing to do that none of us here knows.


Last year India changed rules to allow 100% FDI in aviation, 49% max by a foreign airline, no automatic approval(whatever it means), rest can be a sovereign fund or private equity. So QR and Qatar sovereign fund can structure the transaction.

At INR 265 Qatar/QR can pick up the whole company, not an issue.

After QR's hypothetical takeover, problems will start because they cannot bring working capital, again hypothetical QR owned 9W has to go to an Indian PSB.

This is a vicious cycle and no way to get out.


India has truly stupid rules....it allows for 100% ownership by foreign entities but yet indicates that "effective control" should reside with an Indian national. How does one accomplish that in this scenario? More than contradiction, this is STUPIDITY with a capital S.........how do the bureaucrats even get to frame rules like this? Don't they have to pass an IQ test?
 
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unrave
Posts: 2682
Joined: Tue Jan 06, 2015 6:37 am

Re: Jet Airways: reports cash running out

Sat Jan 26, 2019 12:43 am

Gentle reminder that airlines don't need much WC and Jet's issues don't have anything to do with WC, as explained earlier in the thread.
 
blrsea
Posts: 1950
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Re: Jet Airways: reports cash running out

Sat Jan 26, 2019 1:29 am

edealinfo wrote:
dtw2hyd wrote:
P1aneMad wrote:
...
It will have to be an Indian entity.
Who exactly is willing to do that none of us here knows.


Last year India changed rules to allow 100% FDI in aviation, 49% max by a foreign airline, no automatic approval(whatever it means), rest can be a sovereign fund or private equity. So QR and Qatar sovereign fund can structure the transaction.

At INR 265 Qatar/QR can pick up the whole company, not an issue.

After QR's hypothetical takeover, problems will start because they cannot bring working capital, again hypothetical QR owned 9W has to go to an Indian PSB.

This is a vicious cycle and no way to get out.


India has truly stupid rules....it allows for 100% ownership by foreign entities but yet indicates that "effective control" should reside with an Indian national. How does one accomplish that in this scenario? More than contradiction, this is STUPIDITY with a capital S.........how do the bureaucrats even get to frame rules like this? Don't they have to pass an IQ test?


It just means that the CEO and board should have majority Indian citizens in control, who are subject to Indian laws. Almost all MNCs have local Indians in many positions, so its not that hard.
 
edealinfo
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Re: Jet Airways: reports cash running out

Sat Jan 26, 2019 1:41 am

blrsea wrote:
edealinfo wrote:
dtw2hyd wrote:

It just means that the CEO and board should have majority Indian citizens in control, who are subject to Indian laws. Almost all MNCs have local Indians in many positions, so its not that hard.


I disagree. Foreign companies operating in India (IBM, Microsoft, etc) don't have a legal requirement to demonstrate effective control as do airlines, and "effective control" goes beyond a rubber stamp. That's why the phrase is "effective" control and not just control. Effective control refers to the person (s) that are pulling the strings. For instance, Sonia had effective control even though Manmohan was actually the PM. Likewise, Moody may now be the PM but effective control is with the RSS.
 
blrsea
Posts: 1950
Joined: Fri May 20, 2005 2:22 am

Re: Jet Airways: reports cash running out

Sat Jan 26, 2019 2:03 am

edealinfo wrote:
blrsea wrote:
edealinfo wrote:


I disagree. Foreign companies operating in India (IBM, Microsoft, etc) don't have a legal requirement to demonstrate effective control as do airlines, and "effective control" goes beyond a rubber stamp. That's why the phrase is "effective" control and not just control. Effective control refers to the person (s) that are pulling the strings. For instance, Sonia had effective control even though Manmohan was actually the PM. Likewise, Moody may now be the PM but effective control is with the RSS.


Effective control is not required for all companies. Its sector by sector. Airlines, and I believe telecom also has that requirement. The CEO and board have to be Indian nationals. Not just India, but many other countries have that requirement for various sectors.

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