edealinfo
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 6:07 pm

Would banks’ loans of this magnitude require a Board sign off? ( at the very least to spread blame or cover backsides)

The bank union position is old news rehashed by another newspaper. Indigo’s possible lobbying among unions must be working
 
edealinfo
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 6:10 pm

Bank unions could now cite WOW’s failure to pull the plug on Jet. It is only the elections that will save Jet for 2 months
 
edealinfo
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 6:13 pm

Next major date to watch out for....March 31...when Etihad will announce whether it will formally exit Jet
 
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 8:15 pm

The Hindu Business Line newspaper is reporting that Etihad is preparing to bid in conjunction with a partner ( NIIF) .
Separately, here is what Business Standard has to say......,,,.”Leading sovereign and government-backed funds such as the Abu Dhabi Investment Authority (ADIA) and Singapore-based Temasek Holdings as well as private equity funds like Blackstone and TPG have been sounded out by potential strategic investors on whether they are open to a joint bid for debt-ridden Jet Airways. While the auction process is in a preliminary stage, sources in the know say Naresh Goyal, who still holds 25 per cent in Jet, is considering looking for a partner as he is allowed to bid. The ADIA as well as Etihad Aviation Group, which controls Etihad Airways, is governmen.....
 
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 8:46 pm

edealinfo wrote:
sources in the know say Naresh Goyal, who still holds 25 per cent in Jet, is considering looking for a partner as he is allowed to bid.

Me: Popcorn time! :stirthepot:
 
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 8:49 pm

edealinfo wrote:
The Hindu Business Line newspaper is reporting that Etihad is preparing to bid in conjunction with a partner ( NIIF) .
Separately, here is what Business Standard has to say......,,,.”Leading sovereign and government-backed funds such as the Abu Dhabi Investment Authority (ADIA) and Singapore-based Temasek Holdings as well as private equity funds like Blackstone and TPG have been sounded out by potential strategic investors on whether they are open to a joint bid for debt-ridden Jet Airways. While the auction process is in a preliminary stage, sources in the know say Naresh Goyal, who still holds 25 per cent in Jet, is considering looking for a partner as he is allowed to bid. The ADIA as well as Etihad Aviation Group, which controls Etihad Airways, is governmen.....


So I get we don’t know who to believe but taking the article at face value - boy this is becoming quite the horse race. Fascinating. The play must be a head start in a fast growing market. I wonder how successful 9W and DL’s partnership has really been. The bank union people complaining is annoying. So they don’t trust their own bankers and loan committe? What a joke. If they don’t those employees have much more to worry about
 
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 9:28 pm

I'm having trouble getting excited about 11th hour bids. They didn't happen for AI.

Indian aviation has potential, but Jet is only worth so much.

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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 9:54 pm

SBI Chairman receives kudos

"Rajnish Kumar has demonstrated business acumen and dexterity in leading the lenders towards the most appropriate bank-led resolution under the current circumstances. This demonstrates bankers can take the lead to find solutions for operating entities without allowing impairment of the asset and in the best interest of all stakeholders," said Sunil Mehta, chairman, Punjab National Bank.
"This also shows that banks should start working when they see signs of financial weakness."
Reliance Communications Ltd was one such example where lenders delayed the restructuring plan, resulting in the unsecured creditor walking away with 50% of its dues under the bankruptcy process.
 
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 10:03 pm

From Forbes India citing Business Standard

Http://www.forbesindia.com/news/busines ... 14941.html

“the holding company of Tata Group, has decided that there will be no negotiations for a deal with Jet Airways without a complete due diligence, the report said.

'Legacy issues' and the origin of the airlines funding have been said to be cited as issues by the Tata Group. The conglomerate already operates Vistara and AirAsia India along with foreign players.

If SpiceJet were to invest Jet Airways, it would only add to its existing liabilities. “SpiceJet's own current liabilities are at a historic high. Acquiring Jet Airways, which is almost twice its market capitalisation, will kill the company,” a source told the newspaper.

If IndiGo were to acquire Jet Airways, it would raise monopoly issues, since it already commands a 40 percent market share.“
 
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 10:13 pm

edealinfo wrote:
From Forbes India citing Business Standard

Http://www.forbesindia.com/news/busines ... 14941.html

“the holding company of Tata Group, has decided that there will be no negotiations for a deal with Jet Airways without a complete due diligence, the report said.

'Legacy issues' and the origin of the airlines funding have been said to be cited as issues by the Tata Group. The conglomerate already operates Vistara and AirAsia India along with foreign players.

If SpiceJet were to invest Jet Airways, it would only add to its existing liabilities. “SpiceJet's own current liabilities are at a historic high. Acquiring Jet Airways, which is almost twice its market capitalisation, will kill the company,” a source told the newspaper.

If IndiGo were to acquire Jet Airways, it would raise monopoly issues, since it already commands a 40 percent market share.“


I think the sources of Jet’s funds is a legitimate concern (I think that also scared off DL). That said, if SBI and the banks give everything a clean chit and basically remove (meaning sell) Goyal ‘s and EY’s stakes, then the Tatas shouldn’t have anything to fear (unless they are scared of crossing someone)
 
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 10:21 pm

I don't see a single serious bid coming for the airline except perhaps a joint EY-NIIF bid.
Denial of racism is as egregious as racism itself
 
edealinfo
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Re: Jet Airways: reports cash running out

Thu Mar 28, 2019 11:35 pm

Jet is sending expat pilots on furlough. I guess this is a clever way of Jet not paying foreign pilots while still having them "on call".

https://timesofindia.indiatimes.com/bus ... 621680.cms
 
edealinfo
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 12:02 am

Jet Airways defaults on $140 mn loan; cites temporary liquidity constraints
The first repayment tranche of $31 million was due on March 11 and the second installment of $109 million due today. The airline has failed to pay both the tranches. The $140-million loan was drawn for five years, with bullet repayment obligations at the end of the fifth year.

The loan was guaranteed by Eithad Airways, which now owns 12 per cent in Jet.

Now we know why Etihad may want to bid for jet. Otherwise they will also be on the hook for $140 million!!!

https://www.business-standard.com/artic ... 238_1.html
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 12:12 am

edealinfo wrote:
Jet is sending expat pilots on furlough. I guess this is a clever way of Jet not paying foreign pilots while still having them "on call".

https://timesofindia.indiatimes.com/bus ... 621680.cms

They'll get another job. Like at SpiceJet.
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 12:59 am

edealinfo wrote:
Jet Airways defaults on $140 mn loan; cites temporary liquidity constraints
The first repayment tranche of $31 million was due on March 11 and the second installment of $109 million due today. The airline has failed to pay both the tranches. The $140-million loan was drawn for five years, with bullet repayment obligations at the end of the fifth year.

The loan was guaranteed by Eithad Airways, which now owns 12 per cent in Jet.

Now we know why Etihad may want to bid for jet. Otherwise they will also be on the hook for $140 million!!!

https://www.business-standard.com/artic ... 238_1.html


In the States, we call that final payment a "balloon payment"... but bullet payment is more appropriate for 9W.
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 3:29 am

Image

Can anyone identify what registration are these grounded birds on the tarmac at Chattrapati Shivaji International Airport in Mumbai?

Source: AFP

More updates:
Boeing 737-86N 36813 2976 VT-JTF Jet Airways ferried 28mar19 DEL-TBS on return to lessor (+ 36815/3020 VT-JTG) ex M-ABLA

Source: https://www.skyliner-aviation.de/regdb. ... av4&page=3
- Life is a journey, travel it well -
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 4:10 am

^^ The Wide-bodies are VT-JWQ (left, in long term storage) and JWV, both A332s.
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 12:55 pm

Additional info about Jet recapturing 60 flights in total from Mumbai and Delhi. Source: economic times

“on Thursday, Jet told its travel agents that it is reinstating more than 60 domestic flights between March-end and April 25.
One of the people cited above said that while there may be little change in the number of grounded aircraft by then, the airline will redeploy its international capacity, primarily by cancelling some flights to Gulf, on domestic routes.”
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 2:05 pm

Leasing companies are flat out saying Jet has no strategy and is just in survival mode:

https://www.bing.com/amp/s/finance.yaho ... nance.html

Jet must have an investor soon. I believe it is too late and the banks are throwing away money for an election. For Jet to grow as promised, the leasing companies have to be convinced. At least one isn't and has made statements.

Until investors, including the banks, come up with about 10,000 crore or $1.5 billion, to me this is just a stay of execution.

During Goyal's debacle, this spiked the profits of Indigo, GoAir, and SpiceJet. Heck, I estimate AI made a profit this quarter! So the competition was reinforced. With all the expansion planned by the ULCCs international this year, whomever buys Jet must get costs down (improve utilization and reduce head count on a brutal efficiency drive, and cut sales costs to industry norms as yield certainly hadn't justified the extraordinary sales costs).

How is Jet losing money on Gulf flights?!? The ULCCs should expand to the gulf.

6E is the unknown. I bet they ally with a ME3 with 3 years.

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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 3:30 pm

>>>During Goyal's debacle, this spiked the profits of Indigo, GoAir, and SpiceJet. Heck, I estimate AI made a profit this quarter!

Why are you not mentioning anything about how you think Air Asia and Vistara performed?

>>>>>>>> whomever buys Jet must get costs down (improve utilization and reduce head count on a brutal efficiency drive, and cut sales costs to industry norms as yield certainly hadn't justified the extraordinary sales costs).

Does Indian law allow an employer to fire employees?

>>>>>6E is the unknown. I bet they ally with a ME3 with 3 years.

How can a low cost carrier ally with full service carriers known for their bells and whistles? It certainly won’t be a seamless experience of flying one segment on an ME3 and another on Indigo,
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 4:26 pm

edealinfo wrote:


How can a low cost carrier ally with full service carriers known for their bells and whistles? It certainly won’t be a seamless experience of flying one segment on an ME3 and another on Indigo,

Jetstar has been partnering with Emirates for ages
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 5:10 pm

edealinfo wrote:
Why are you not mentioning anything about how you think Air Asia and Vistara performed?

1. How do I find the quarterly reports for the Indian entities? I can find good analysis if the before mentioned airlines.
2. So far they haven't been very nimble.
3. I believe the Indian market is a value market, over supplied with premium product even without Jet. (Vistara).
4. The load factors I've seen on both do not impress me. I am of the impression they are being out marketed.
5. Indigo, SpiceJet, and GoAir all are prepared to grow 30% plus in 2019. If Vistara and AirAsia were planning that and I missed it, they really must improve their social network marketing.

I quantify. Give me numbers to base estimates on. I have enough information to believe Indigo, SpiceJet, and GoAir have been profitable January-March of 2019. Profitable companies can borrow to grow quickly or receive allocations from the mother company.

I have nothing against the two airlines, I just see the other 3 ULCCs more nimble.

edealinfo wrote:
Does Indian law allow an employer to fire employees?

I don't know. That doesn't change the brutal economic reality. If the answer is no... Bummer for all the employees as Jet won't be viable.

Your other question was already answered.

You seem to have missed my point; the competition has changed the market and that means how Jet is currently structured is not viable. Within ba year 6E will double their international offering. I estimate the A321NEO will carry a passenger for 8% less with more legroom in 6E configurations. (Very high density A320, a little less dense A321).

If it isn't possible to reform Jet, they are done. Indigo has the network in India. Once they have their opperations back to punctual, they will grow well.

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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 5:19 pm

Pilots reiterated they will not fly if dues are not cleared:

https://m.timesofindia.com/business/ind ... 636578.cms

I saw other links that the SBI is trying to find other interested buyers. Right now, this feels like the Air India privatization; lots of hope not grounded in reality.

As I posted before, Jet either controls costs or don't bother.

Lightsaber

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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 5:23 pm

lightsaber wrote:
Pilots reiterated they will not fly if dues are not cleared:

https://m.timesofindia.com/business/ind ... 636578.cms

I saw other links that the SBI is trying to find other interested buyers. Right now, this feels like the Air India privatization; lots of hope not grounded in reality.

As I posted before, Jet either controls costs or don't bother.

Lightsaber

Lightsaber

But, weren’t the pilots promised that they would get their money “as soon as possible”? This of course is contingent on SBI that said it would send funding “as soon as possible”. SBI was placed in charge of Jet on Monday. does “as sooon as possible” have a time limit?
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 5:27 pm

lightsaber wrote:
edealinfo wrote:
Why are you not mentioning anything about how you think Air Asia and Vistara performed?

1. How do I find the quarterly reports for the Indian entities? I can find good analysis if the before mentioned airlines.
2. So far they haven't been very nimble.
3. I believe the Indian market is a value market, over supplied with premium product even without Jet. (Vistara).
4. The load factors I've seen on both do not impress me. I am of the impression they are being out marketed.
5. Indigo, SpiceJet, and GoAir all are prepared to grow 30% plus in 2019. If Vistara and AirAsia were planning that and I missed it, they really must improve their social network marketing.

I quantify. Give me numbers to base estimates on. I have enough information to believe Indigo, SpiceJet, and GoAir have been profitable January-March of 2019. Profitable companies can borrow to grow quickly or receive allocations from the mother company.

I have nothing against the two airlines, I just see the other 3 ULCCs more nimble.

edealinfo wrote:
Does Indian law allow an employer to fire employees?

I don't know. That doesn't change the brutal economic reality. If the answer is no... Bummer for all the employees as Jet won't be viable.

Your other question was already answered.

You seem to have missed my point; the competition has changed the market and that means how Jet is currently structured is not viable. Within ba year 6E will double their international offering. I estimate the A321NEO will carry a passenger for 8% less with more legroom in 6E configurations. (Very high density A320, a little less dense A321).

If it isn't possible to reform Jet, they are done. Indigo has the network in India. Once they have their opperations back to punctual, they will grow well.

Lightsaber


What do you think would impede a new owner from reforming Jet. Other than good management! That is really where i struggle. I just don’t get it. Use this to reform everything from employee salaries to debt to aircraft. I agree that a premium model wont work in India. But a hybrid approach (like the US) seems the right path. India does have premium traffic (meaning it is no Thailand forgot about loads of other places). Add to that it is still a status/class society. Jet should keep a small business class and sell realatively cheap upgrades for domestic flights (like DL, AA, UA do). When ever my family flies domestic we are always struck at how cheap fares are but how crazy expensive First/business can be. Makes no sense (like US airlines 20 years ago). New Jet shoudl use their FF program to lock in whatever the business/premium crowd is. If any market will spend on frills it is BOM (their hub). Use these higher paying pax to allow for cheap Y fares to compete against indigo. There is no reason Jet should be stuck with the same legacy issues that US carriers have. It doesn’t look like Jet’s unions are going to fight a restructure.
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 5:34 pm

edealinfo wrote:
lightsaber wrote:
Pilots reiterated they will not fly if dues are not cleared:

https://m.timesofindia.com/business/ind ... 636578.cms

I saw other links that the SBI is trying to find other interested buyers. Right now, this feels like the Air India privatization; lots of hope not grounded in reality.

As I posted before, Jet either controls costs or don't bother.

Lightsaber

Lightsaber

But, weren’t the pilots promised that they would get their money “as soon as possible”? This of course is contingent on SBI that said it would send funding “as soon as possible”. SBI was placed in charge of Jet on Monday. does “as sooon as possible” have a time limit?

Pilots are not moving their 4/1 date as noted in the link I posted above. So as soon as possible means this weekend. Not a good deadline for government banks.

That time limit hasn't changed in weeks.

I doubt leasing companies are in a mood to change their deadlines either. As I posted in a prior post, one was
Quoted as Jet is in survival mode (no strategy). Yeah.. different word order, by my interpretation is Jet is being given just enough money for hope before an election and then will be dealt with.

Since the most likely fate is then liquidation, leasing companies would be smart to transfer assets ASAP. If the reality is different, they need to be shown love; "Nothing says love like cash"is an old business axiom if you aren't familiar with what a business showing love implies.

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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 5:57 pm

CaliguyNYC wrote:
lightsaber wrote:
edealinfo wrote:
Why are you not mentioning anything about how you think Air Asia and Vistara performed?

1. How do I find the quarterly reports for the Indian entities? I can find good analysis if the before mentioned airlines.
2. So far they haven't been very nimble.
3. I believe the Indian market is a value market, over supplied with premium product even without Jet. (Vistara).
4. The load factors I've seen on both do not impress me. I am of the impression they are being out marketed.
5. Indigo, SpiceJet, and GoAir all are prepared to grow 30% plus in 2019. If Vistara and AirAsia were planning that and I missed it, they really must improve their social network marketing.

I quantify. Give me numbers to base estimates on. I have enough information to believe Indigo, SpiceJet, and GoAir have been profitable January-March of 2019. Profitable companies can borrow to grow quickly or receive allocations from the mother company.

I have nothing against the two airlines, I just see the other 3 ULCCs more nimble.

edealinfo wrote:
Does Indian law allow an employer to fire employees?

I don't know. That doesn't change the brutal economic reality. If the answer is no... Bummer for all the employees as Jet won't be viable.

Your other question was already answered.

You seem to have missed my point; the competition has changed the market and that means how Jet is currently structured is not viable. Within ba year 6E will double their international offering. I estimate the A321NEO will carry a passenger for 8% less with more legroom in 6E configurations. (Very high density A320, a little less dense A321).

If it isn't possible to reform Jet, they are done. Indigo has the network in India. Once they have their opperations back to punctual, they will grow well.

Lightsaber


What do you think would impede a new owner from reforming Jet. Other than good management! That is really where i struggle. I just don’t get it. Use this to reform everything from employee salaries to debt to aircraft. I agree that a premium model wont work in India. But a hybrid approach (like the US) seems the right path. India does have premium traffic (meaning it is no Thailand forgot about loads of other places). Add to that it is still a status/class society. Jet should keep a small business class and sell realatively cheap upgrades for domestic flights (like DL, AA, UA do). When ever my family flies domestic we are always struck at how cheap fares are but how crazy expensive First/business can be. Makes no sense (like US airlines 20 years ago). New Jet shoudl use their FF program to lock in whatever the business/premium crowd is. If any market will spend on frills it is BOM (their hub). Use these higher paying pax to allow for cheap Y fares to compete against indigo. There is no reason Jet should be stuck with the same legacy issues that US carriers have. It doesn’t look like Jet’s unions are going to fight a restructure.

I was replying to the prior poster who asked if Indian companies could fire people.

There is some premium in India, but not much. I'm going from memory on the RASK difference between Jet and Indigo wasn't enough to justify the reduced seat count in Jet's aircraft. If the added space does not generate more profit, then there is a problem.

My impression is India law doesn't clear the books like US chapter 11. If I'm wrong, point me to a good summary of Indian bankruptcy code.

Jet is flying so much less and far less predictably, they have lost many premium customers. They have lost too much of what made them valuable. I hope to be proven wrong.

The hardest part will be maintaining opperations while shedding staff. That is never easy.

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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 6:56 pm

Aarhus, my brother booked a last minute fare on Jet from North America to India. He wasn’t aware that Jet was in deep sh$$t. He was looking for bereavement fares— presumably Jet still offers those. The flight is through Amsterdam so maybe his outbound flights are safe..,,inbound will depend on how long Jet hangs on.
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 8:08 pm

Found a link on December Jet expenses:
https://www.thehindu.com/business/reviv ... 6.ece/amp/

All amounts inr crore:
1,253 other (I assume this includes fuel)
781 salary and dues to employees
730 aircraft rental/payments
687 aircraft maintenance
256 finance fees

Now I disagree with the article's conclusion that only a full operation will pay overhead (staff must be cut).

If restructured, the financial costs will drop. Something is off in the maintenance (by about 10% high).

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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 8:18 pm

lightsaber wrote:
Found a link on December Jet expenses:
https://www.thehindu.com/business/reviv ... 6.ece/amp/

All amounts inr crore:
1,253 other (I assume this includes fuel)
781 salary and dues to employees
730 aircraft rental/payments
687 aircraft maintenance
256 finance fees

Now I disagree with the article's conclusion that only a full operation will pay overhead (staff must be cut).

If restructured, the financial costs will drop. Something is off in the maintenance (by about 10% high).

Lightsaber


This is interesting. I do feel a bit differently than you on vendors reducing their amounts owed (read a settlement). I hear you that many have assets they can seize like engines. But in the end if they walk away they get their asset but not the fees owed nor they do probably keep the business relationship with the new owner. The creditors that are saying Jet has no plan right now are right (and really points to where they are looking). A new owner/manager - say EY or Tatas could come in and say forgive 30% of fees owed and we will grow our future business with you. The new owner would be investing considerable amount of money in Jet’s turn around. So it is conceivable, but not garunteed, that some vendors will forgive some portion of the amounts owed. Also employees could get some back pay in stock. Finance fees are also an area that can be forgiven. I am just thinking out loud here.
 
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 9:34 pm

CaliguyNYC wrote:
lightsaber wrote:
Found a link on December Jet expenses:
https://www.thehindu.com/business/reviv ... 6.ece/amp/

All amounts inr crore:
1,253 other (I assume this includes fuel)
781 salary and dues to employees
730 aircraft rental/payments
687 aircraft maintenance
256 finance fees

Now I disagree with the article's conclusion that only a full operation will pay overhead (staff must be cut).

If restructured, the financial costs will drop. Something is off in the maintenance (by about 10% high).

Lightsaber


This is interesting. I do feel a bit differently than you on vendors reducing their amounts owed (read a settlement). I hear you that many have assets they can seize like engines. But in the end if they walk away they get their asset but not the fees owed nor they do probably keep the business relationship with the new owner. The creditors that are saying Jet has no plan right now are right (and really points to where they are looking). A new owner/manager - say EY or Tatas could come in and say forgive 30% of fees owed and we will grow our future business with you. The new owner would be investing considerable amount of money in Jet’s turn around. So it is conceivable, but not garunteed, that some vendors will forgive some portion of the amounts owed. Also employees could get some back pay in stock. Finance fees are also an area that can be forgiven. I am just thinking out loud here.

You will never get fragmented lenders and creditors to agree to re-organisation, unless some players are bold enough to increase their exposures and take out all the trouble makers, AND they are confident they possess perfect information.

That's the reason the re-structure has stalled. Those demanding immediate repayment / payment can't reach agreement on the discount (and what's included / excluded), and those in a position to fund take outs can't agree the discount, their premium, or even whether inclined to take on the role.

For example, the take out group will want all interest, fees and penalties reversed from an agreed date. Can't agree the date, let alone what is included / excluded, nor who is in the former and latter groups.

Remember, consistent agreement is required across all groups. Numbers invented, but say immediate payout / walkaway - 10 cents in the dollar, versus those taking on more exposure predict 40 cents in the dollar. Those staying agree to stay aboard for a minimum of x years, unless Y% by exposure agree to a change, with weekly reporting and fortnightly meetings.

The longer this drags on, the lower the residual values, and the less worthwhile the effort / cost of re-financing, re-structuring and oversight.
 
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Phosphorus
Posts: 576
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 9:44 pm

smartplane wrote:
CaliguyNYC wrote:
lightsaber wrote:
Found a link on December Jet expenses:
https://www.thehindu.com/business/reviv ... 6.ece/amp/

All amounts inr crore:
1,253 other (I assume this includes fuel)
781 salary and dues to employees
730 aircraft rental/payments
687 aircraft maintenance
256 finance fees

Now I disagree with the article's conclusion that only a full operation will pay overhead (staff must be cut).

If restructured, the financial costs will drop. Something is off in the maintenance (by about 10% high).

Lightsaber


This is interesting. I do feel a bit differently than you on vendors reducing their amounts owed (read a settlement). I hear you that many have assets they can seize like engines. But in the end if they walk away they get their asset but not the fees owed nor they do probably keep the business relationship with the new owner. The creditors that are saying Jet has no plan right now are right (and really points to where they are looking). A new owner/manager - say EY or Tatas could come in and say forgive 30% of fees owed and we will grow our future business with you. The new owner would be investing considerable amount of money in Jet’s turn around. So it is conceivable, but not garunteed, that some vendors will forgive some portion of the amounts owed. Also employees could get some back pay in stock. Finance fees are also an area that can be forgiven. I am just thinking out loud here.

You will never get fragmented lenders and creditors to agree to re-organisation, unless some players are bold enough to increase their exposures and take out all the trouble makers, AND they are confident they possess perfect information.

That's the reason the re-structure has stalled. Those demanding immediate repayment / payment can't reach agreement on the discount (and what's included / excluded), and those in a position to fund take outs can't agree the discount, their premium, or even whether inclined to take on the role.

For example, the take out group will want all interest, fees and penalties reversed from an agreed date. Can't agree the date, let alone what is included / excluded, nor who is in the former and latter groups.

Remember, consistent agreement is required across all groups. Numbers invented, but say immediate payout / walkaway - 10 cents in the dollar, versus those taking on more exposure predict 40 cents in the dollar. Those staying agree to stay aboard for a minimum of x years, unless Y% by exposure agree to a change, with weekly reporting and fortnightly meetings.

The longer this drags on, the lower the residual values, and the less worthwhile the effort / cost of re-financing, re-structuring and oversight.


True. And indeed, it's difficult to get such an agreement, especially with different kinds of collateral/security available for different creditors.
Why should an MRO sitting on engine stock be as willing to bend as much, as an unsecured creditor?
Why should a lessor, owning operational planes in flyaway condition, be as malleable as one, who's planes are stuck in a repair shop, and will not return to sky, unless more money is invested in putting them together -- and buying off MRO's in the process?
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Exeiowa
Posts: 151
Joined: Fri Jul 06, 2018 4:49 pm

Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 9:46 pm

I suspect if you have 10,000 Crore to drop in to Indian aviation you could get a better rate of return on things other than Jet right now. Lessors can ask for all their money, because right now their assests can be making money for them elsewhere. You want to quible abou the date you pay them for, they could find someone else who will pay for that 3 or 4 months garunteed for the next period, instead of hoping to get payed. And with no planes you got no airline. Everyday this has dragged on the competition has moved ahead, they should have worked on a solution in good faith earlier, I think they just expected EY to bail them out. They had a a loan garuntee from EY, I am wondering what EY got in exchange it looks like a whole lot of nothing.

I will refrain from commenting further because I have never understood why people are so pig headed and cant just get along.
 
CaliguyNYC
Posts: 1086
Joined: Tue Sep 27, 2016 7:27 pm

Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 9:47 pm

Why does there need to be the same deal across everyone? For the banks I get that. But for a vendor, it is usually an independent negotiation. Remember this is not a court sponsored bankruptcy. You can always approach a vendor and negotiate. As someone above pointed out unsecured debT holder will be willing to bend in a way different than someone who can take their asset and make the same or more money (and doesn’t need new Jet in the future). I bet the real answer is so where between my overly logical approach and the totally rigid zero sum game that others are making it out to be. What happened at SpiceJet’s turnaround. I bet vendors and employees worked with them (but I have no real info on them)
 
smartplane
Posts: 1024
Joined: Fri Aug 03, 2018 9:23 pm

Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 10:05 pm

Phosphorus wrote:
smartplane wrote:
CaliguyNYC wrote:

This is interesting. I do feel a bit differently than you on vendors reducing their amounts owed (read a settlement). I hear you that many have assets they can seize like engines. But in the end if they walk away they get their asset but not the fees owed nor they do probably keep the business relationship with the new owner. The creditors that are saying Jet has no plan right now are right (and really points to where they are looking). A new owner/manager - say EY or Tatas could come in and say forgive 30% of fees owed and we will grow our future business with you. The new owner would be investing considerable amount of money in Jet’s turn around. So it is conceivable, but not garunteed, that some vendors will forgive some portion of the amounts owed. Also employees could get some back pay in stock. Finance fees are also an area that can be forgiven. I am just thinking out loud here.

You will never get fragmented lenders and creditors to agree to re-organisation, unless some players are bold enough to increase their exposures and take out all the trouble makers, AND they are confident they possess perfect information.

That's the reason the re-structure has stalled. Those demanding immediate repayment / payment can't reach agreement on the discount (and what's included / excluded), and those in a position to fund take outs can't agree the discount, their premium, or even whether inclined to take on the role.

For example, the take out group will want all interest, fees and penalties reversed from an agreed date. Can't agree the date, let alone what is included / excluded, nor who is in the former and latter groups.

Remember, consistent agreement is required across all groups. Numbers invented, but say immediate payout / walkaway - 10 cents in the dollar, versus those taking on more exposure predict 40 cents in the dollar. Those staying agree to stay aboard for a minimum of x years, unless Y% by exposure agree to a change, with weekly reporting and fortnightly meetings.

The longer this drags on, the lower the residual values, and the less worthwhile the effort / cost of re-financing, re-structuring and oversight.


True. And indeed, it's difficult to get such an agreement, especially with different kinds of collateral/security available for different creditors.
Why should an MRO sitting on engine stock be as willing to bend as much, as an unsecured creditor?
Why should a lessor, owning operational planes in flyaway condition, be as malleable as one, who's planes are stuck in a repair shop, and will not return to sky, unless more money is invested in putting them together -- and buying off MRO's in the process?

Security is based on 'going concern'.

There will be a distinction on secured v unsecured, but even those creditors with security will by now have exposures greater than the value of the security, so a combination of both.

Engines will be secured assets, so the MRO will ultimately be involved in multiple legal cases for the return of the assets.

Time is money, except it seems in this case.
 
smartplane
Posts: 1024
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Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 10:13 pm

CaliguyNYC wrote:
Why does there need to be the same deal across everyone? For the banks I get that. But for a vendor, it is usually an independent negotiation. Remember this is not a court sponsored bankruptcy. You can always approach a vendor and negotiate. As someone above pointed out unsecured debT holder will be willing to bend in a way different than someone who can take their asset and make the same or more money (and doesn’t need new Jet in the future). I bet the real answer is so where between my overly logical approach and the totally rigid zero sum game that others are making it out to be. What happened at SpiceJet’s turnaround. I bet vendors and employees worked with them (but I have no real info on them)

There needs to be a deal across the board, because without it, the new management team, instead of getting on with the serious business of re-building / moving forward, will be constantly fighting fires over their shoulders.

Alternative is for receivers / liquidators to take control, create Jet 2019, freeze every liability so creditors wait years to see what if anything they get back, while receivers / liquidators open new accounts, deduct fees and expenses, and run an airline to the best of an accountants ability (so usually orderly close down or sale).
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 10:57 pm

Nero (SBI) fiddles while Rome (Jet) burns
Looks like dilly dallying to me. See below from the Economic Times.,,

“It is difficult for any airlines to turn around if it is grounded. We will examine what is the minimum requirement of fund-based and non-fund based loan it would require to carry out operation,” Basu said.

It was earlier reported that banks would provide Rs 1500 crore as fresh working capital loan.
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Fri Mar 29, 2019 11:11 pm

The Government is now in a pickle because:
1. FAres have increased exponentially to Kashmir, Northeast and a few other places and pressure is boroughs to bear to increase capacity.
2. If capacity is increased by releasing Jet’s slots, which competitors are lobbying for, Jet’s value decreases to those pumping new funds (SBI) and those hoping that Jet will survive (existing creditors).
3. airports want the slots to be released so they can make money.
4. Jet wants to keep all its Mumbai and Delhi, and prime slots at other cities, to have any chance of surviving.
5. The public wants more capacity and Jet to survive at the same time.
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 12:16 am

Does anyone know how many slots Jet has vacated so far at Mumbai since feb 2018? Presumably, these are the number of slots it will seek to reclaim???
 
edealinfo
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Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 12:19 am

unrave wrote:
Jetstar has been partnering with Emirates for ages

Is the seat pitch on Jetstar the same as it is on Indigo?? And ones Jerstar serve food at no charge on its international flights? As far as I know Indigo doesn’t? In my opinion switching from EMIRATES or Qatar to Indigo is a huge downgrade in both the soft and hard product
 
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unrave
Posts: 2620
Joined: Tue Jan 06, 2015 6:37 am

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 1:23 am

edealinfo wrote:
unrave wrote:
Jetstar has been partnering with Emirates for ages

Is the seat pitch on Jetstar the same as it is on Indigo?? And ones Jerstar serve food at no charge on its international flights? As far as I know Indigo doesn’t? In my opinion switching from EMIRATES or Qatar to Indigo is a huge downgrade in both the soft and hard product

Jetstar seat pitch on A320s is WORSE than IndiGo's A321.
IndiGo provides free food for tickets purchased on TK.
Most budget travellers wouldn't care.
Denial of racism is as egregious as racism itself
 
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lightsaber
Moderator
Posts: 17920
Joined: Wed Jan 19, 2005 10:55 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 3:05 am

smartplane wrote:
Phosphorus wrote:
smartplane wrote:
You will never get fragmented lenders and creditors to agree to re-organisation, unless some players are bold enough to increase their exposures and take out all the trouble makers, AND they are confident they possess perfect information.

That's the reason the re-structure has stalled. Those demanding immediate repayment / payment can't reach agreement on the discount (and what's included / excluded), and those in a position to fund take outs can't agree the discount, their premium, or even whether inclined to take on the role.

For example, the take out group will want all interest, fees and penalties reversed from an agreed date. Can't agree the date, let alone what is included / excluded, nor who is in the former and latter groups.

Remember, consistent agreement is required across all groups. Numbers invented, but say immediate payout / walkaway - 10 cents in the dollar, versus those taking on more exposure predict 40 cents in the dollar. Those staying agree to stay aboard for a minimum of x years, unless Y% by exposure agree to a change, with weekly reporting and fortnightly meetings.

The longer this drags on, the lower the residual values, and the less worthwhile the effort / cost of re-financing, re-structuring and oversight.


True. And indeed, it's difficult to get such an agreement, especially with different kinds of collateral/security available for different creditors.
Why should an MRO sitting on engine stock be as willing to bend as much, as an unsecured creditor?
Why should a lessor, owning operational planes in flyaway condition, be as malleable as one, who's planes are stuck in a repair shop, and will not return to sky, unless more money is invested in putting them together -- and buying off MRO's in the process?

Security is based on 'going concern'.

There will be a distinction on secured v unsecured, but even those creditors with security will by now have exposures greater than the value of the security, so a combination of both.

Engines will be secured assets, so the MRO will ultimately be involved in multiple legal cases for the return of the assets.

Time is money, except it seems in this case.

The MRO is protected by Singapore law. When they get their money is in doubt. They will release the engines when paid or sell when the debt approaches the value of the engines. The company owning the engines must pay or forfeit the engines.

Not all vendors have an incentive to play nice.

This is going to make a mess of repossessing some airframes. I fully expect that aircraft leasing in India will get new rules no matter how Jet is resolved.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 3:12 am

Please see below. I didn’t know it was difficult to get slots at Raipur so will assume the writer intended to mean Delhi slots. But when did Vistara first announce the flights to Raipur? At that time were Jet’s flights grounded?

“Crisis-I ridden Jet Airways has lost valuable flight slots to Vistara at Delhi and Raipur airports.

The joint venture carrier of Tata Sons and Singapore Airlines is starting two new flights on Delhi-Raipur-Delhi sector from March 31. Vistara has been allotted the same slots in which Jet operated its flights before terminating the services last month due to financial crisis.”
 
blrsea
Posts: 1912
Joined: Fri May 20, 2005 2:22 am

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 3:21 am

Problem with SBI led plan is that Goyal still has more than 25% stake (25.5%). Ideally, this should have been below 20%, ~17% as had been reported under earlier resolution plan. It now looks like that is causing problems finding new investors. And as many of us had speculated earlier, this is more of a bandaid to make sure Jet crawls along till elections. After that, all bets are off.

Rescue deal could be no panacea for struggling Jet Airways

...
This may not be easy especially with Goyal still holding a 25.5 percent share in Jet Airways, which gives him the legal right to block key decisions including raising capital, issuing new shares and diluting equity.

If a deep-pocketed investor is not found soon, Jet may struggle for funds again as the interim loan given by the banks will not last for very long, say lessors and analysts.
...
"Are you not creating a huge hurdle for the potential investors?" said a senior government official, reacting to the bank-led bailout in which Goyal still has a stake.
...
State Bank of India Chairman Rajnish Kumar has said Goyal would not pose a problem for any incoming investor but also said that the former chairman would be allowed to bid for the banks' shares when they are auctioned, leaving a window open for the founder to come back.
...
"This is just a band-aid until the elections," said a source close to Jet. "We don't know if this bailout will work," he said, adding that Jet is like a hot piece of coal for the banks which they want to drop as soon as possible.
...
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 2:08 pm

blrsea wrote:
Problem with SBI led plan is that Goyal still has more than 25% stake (25.5%). Ideally, this should have been below 20%, ~17% as had been reported under earlier resolution plan. It now looks like that is causing problems finding new investors. And as many of us had speculated earlier, this is more of a bandaid to make sure Jet crawls along till elections. After that, all bets are off.


The story you quoted is missing key facts. Even though Goyal technically holds 25.5%, per the direction of SBI, Goyal has parked the majority portion in "escrow" such that he only "controls" 9%. SBI is now offering 67% to investors (51% of the banks' holding plus 16% from Goyal's escrow). []Remember, Etihad and others (Tata's ??) had previously insisted that Goyal hold no more than 10% in the new Jet].

Separately, I believe that the SBI Chairman has secured a commitment from Etihad that should the buyer demand that Etihad exit, Etihad would have to offer their stake as well.

Full credit to the SBI Chairman for the foresight to have thought this through.
Last edited by edealinfo on Sat Mar 30, 2019 2:20 pm, edited 1 time in total.
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 2:18 pm

Now it seems that even the engineers are threatening strike action:

https://timesofindia.indiatimes.com/bus ... 643291.cms
 
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unrave
Posts: 2620
Joined: Tue Jan 06, 2015 6:37 am

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 2:49 pm

edealinfo wrote:
Even though Goyal technically holds 25.5%, per the direction of SBI, Goyal has parked the majority portion in "escrow" such that he only "controls" 9%. SBI is now offering 67% to investors (51% of the banks' holding plus 16% from Goyal's escrow)

Source? And what does an "escrow" account for shares even mean?
Denial of racism is as egregious as racism itself
 
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lightsaber
Moderator
Posts: 17920
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Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 3:29 pm

unrave wrote:
edealinfo wrote:
Even though Goyal technically holds 25.5%, per the direction of SBI, Goyal has parked the majority portion in "escrow" such that he only "controls" 9%. SBI is now offering 67% to investors (51% of the banks' holding plus 16% from Goyal's escrow)

Source? And what does an "escrow" account for shares even mean?

It means if the minimum sales price is met, the shares are sold. Goyal owns them, but has signed a contract to sell the item.


Have you ever bought or sold a home? High value items are almost always put into escrow during a sale to smooth the transaction. Heck, I've used retail stock sales to put share in escrow to sell at a minimum sales price. I still owned the shares, but I couldn't do any other transaction until the escrow period ended or the shares sold. Look at your online stock account prospectus, it should describe the process for retail investors. Goyal's is a little more complicated and bound by the contract he would have signed.

At this time, SBI votes his shares, but he legally still owns them. Just as I've signed over voting rights on my stock in the past (always for no more than 1 year... I'm not silly).

Lightsaber
Late edit:
Link on putting shares in escrow:
https://www.thehindubusinessline.com/ec ... 632525.ece

“All the shares of Jet held by Etihad, Goyal and lenders will be kept in a common (escrow) account. Post the restructuring, Goyal’s holding will be less than 10 per cent,”said a banking industry source."

All indications are SBI controls how those shares vote.
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 3:35 pm

lightsaber wrote:
unrave wrote:
edealinfo wrote:
Even though Goyal technically holds 25.5%, per the direction of SBI, Goyal has parked the majority portion in "escrow" such that he only "controls" 9%. SBI is now offering 67% to investors (51% of the banks' holding plus 16% from Goyal's escrow)

Source? And what does an "escrow" account for shares even mean?

It means if the minimum sales price is met, the shares are sold. Goyal owns them, but has signed a contract to sell the item.


Have you ever bought or sold a home? High value items are almost always put into escrow during a sale to smooth the transaction. Heck, I've used retail stock sales to put share in escrow to sell at a minimum sales price. I still owned the shares, but I couldn't do any other transaction until the escrow period ended or the shares sold. Look at your online stock account prospectus, it should describe the process for retail investors. Goyal's is a little more complicated and bound by the contract he would have signed.

At this time, SBI votes his shares, but he legally still owns them. Just as I've signed over voting rights on my stock in the past (always for no more than 1 year... I'm not silly).

Lightsaber


Thank you and a very good explanation of how it works.
 
edealinfo
Posts: 1651
Joined: Mon Jan 21, 2019 7:11 pm

Re: Jet Airways: reports cash running out

Sat Mar 30, 2019 3:44 pm

In less than 30 hours, we would know whether Etihad has decided to exit Jet or acquire 49% of it (with the balance of 67% to be acquired by the NIIF). Etihad's Board meeting to discuss Jet's fate is on March 31, UAE time. Does anyone want to guess how they would vote?

This would be a hard one to call as Etihad holds a stake in Jet and Jet Privilege and is on the hook for $140 M to HSBC for a loan it guaranteed on behalf of Jet which Jet has failed to pay up. Further, with India unlikely to increase AUH bilateral anytime in the near future, Jet is the only avenue for Etihad to gain 2X its existing capacity by leveraging Jet's capacity for flights to AUH and feeding its AUH hub.

On the downside, it would have to further invest 4,500 crores to stabilize Jet with no guarantee of a turnaround.

I am sure Lightsaber would recommend Etihad stay out while Caliguy may recommend an investment is the terms are reasonable. Correct? And, others?
Last edited by edealinfo on Sat Mar 30, 2019 3:46 pm, edited 1 time in total.

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