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unrave
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 1:21 am

lightsaber wrote:
Wait a second...

Do I interpret this correct that the trading window being closed until 48 hours after the release of the quarterly report?

https://www.bloombergquint.com/business ... esults.amp

Please tell me I read that wrong, for no one who trades sticks likes a stick that cannot be traded...

Late add:. That, if true, is a scary addition. It implies the auditing committee for Jet did their job and found issue with something of importance. Not a good time for India's full service carriers...

No, that is the restriction on insider trading.
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binayak
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 6:18 am

media never stops
https://www.bloombergquint.com/business ... ash-crunch
My question, when all airlines (even LCCs to some extent) are facing trouble due to fuel prices, why's always the finger pointed at jet airways. Just because it's listed unlike the other two FSCs?
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unrave
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 7:06 am

binayak wrote:
media never stops
https://www.bloombergquint.com/business ... ash-crunch
My question, when all airlines (even LCCs to some extent) are facing trouble due to fuel prices, why's always the finger pointed at jet airways. Just because it's listed unlike the other two FSCs?

I really don't get what you're complaining about here? Jet Airways is a major public listed company in India whose share price is down two thirds this year. Its bond rating is in junk territory, its profits have dried up, it has large debt repayment obligations coming up, it is common knowledge that the industry is down AND its quarterly results have been deferred by its audit committee. Don't you think it is newsworthy?
And that article is entire factual. There are a lot of PR pieces masquerading as journalism but this one is not.
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binayak
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 7:37 am

unrave wrote:
I really don't get what you're complaining about here? Jet Airways is a major public listed company in India whose share price is down two thirds this year. Its bond rating is in junk territory, its profits have dried up, it has large debt repayment obligations coming up, it is common knowledge that the industry is down AND its quarterly results have been deferred by its audit committee. Don't you think it is newsworthy?
And that article is entire factual. There are a lot of PR pieces masquerading as journalism but this one is not.


I know that and I didn't even quote that article as PR. Only question couldn't the title have full service carriers instead of specifying jet airways. The article isn't about deferring q1 results but it's about effect of budget travel on FSCs.
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lightsaber
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 11:08 am

unrave wrote:
lightsaber wrote:
Wait a second...

Do I interpret this correct that the trading window being closed until 48 hours after the release of the quarterly report?

https://www.bloombergquint.com/business ... esults.amp

Please tell me I read that wrong, for no one who trades sticks likes a stick that cannot be traded...

Late add:. That, if true, is a scary addition. It implies the auditing committee for Jet did their job and found issue with something of importance. Not a good time for India's full service carriers...

No, that is the restriction on insider trading.

Ah... Thank you, that makes much more sense. Phew!

binayak wrote:
media never stops
https://www.bloombergquint.com/business ... ash-crunch
My question, when all airlines (even LCCs to some extent) are facing trouble due to fuel prices, why's always the finger pointed at jet airways. Just because it's listed unlike the other two FSCs?

The other two Full service carriers (FSCs) will try to hide their finances. But we know Air India is behind on payroll and is in technical default.

But as already noted, Jet's bond rating was downgraded to Junk earlier this year after the prior quarter and they are losing money.

Budget travel is impacting all the FSCs. I was hoping for a conference call to show how it is effecting the FSCs, but we will have to wait.


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Exeiowa
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 4:20 pm

Jet's biggest problem now is not its operating financials but that perception becomes reality. Even healthy companies would find it difficult if people came calling all at once wanting to be payed without access to working capital to smooth over operational expenditures and revenue or people stop booking out of concern for obligation fullfilment.
 
CaliguyNYC
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 5:07 pm

But wasn't Jet stupid to announce they are running out of cash? Or if they went to the unions and the unions leaked it, then the unions are dumb. The full Jet running out of cash could have been better handled. In general Indian aviation is sloppy and the press only adds to the weirdness. How can anyone really succeed in an crazy environment. What's next the MH govt saying fuel prices are up so we want to raise aviation tax as well?
 
VTORD
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 5:10 pm

binayak wrote:
media never stops
https://www.bloombergquint.com/business ... ash-crunch
My question, when all airlines (even LCCs to some extent) are facing trouble due to fuel prices, why's always the finger pointed at jet airways. Just because it's listed unlike the other two FSCs?

The question is why are you taking this so personally. Since this article is about JET, I don't see what you are complaining about. If you insist:
"Jet Airways India Ltd. was once at the forefront of India’s rapidly growing market for air travel, but a challenge from budget carriers and surging fuel prices are backing the airline into a corner"
"Jet Airways stock has tumbled 67 percent this year, making it the worst performing airline stock in Asia Pacific"
"Jet Airways’s rivals are faring no better either. The entire sector has been hit by rising fuel prices, depreciation of the rupee and debt to fund aircraft purchases and rapid growth. IndiGo, operated by InterGlobe Aviation Ltd., posted a 97 percent drop in net profit, its worst-ever quarterly performance"


C'mon man, there is nothing in that article that is "singling out" 9W.
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evank516
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 5:48 pm

If Jet goes belly up, I'm willing to bet DL retracts its plan to return to India.
 
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lightsaber
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 10:34 pm

I'll do my comment first, I think Jet is doing better than the press is roasting them.

They must have a conference call soon.

“Jet Airways is facing challenges on all fronts,” Bloomberg Intelligence’s Singapore-based analyst Rahul Kapoor said. “The rise in oil prices is having a double whammy on their earnings. They already have a sparse balance sheet compared with other Indian carriers.”
The probability of the airline failing to repay its obligations in the next 12 months is near the highest since October 2015, according to a Bloomberg Default Risk model, which tracks metrics including share price, debt and cash flow. SpiceJet’s risk is the most elevated since last February, and the gauge is little changed for IndiGo, the nation’s biggest airline.

The carrier needs as much as $500 million in cash immediately and must refinance $400 million of debt, backed by a guarantor, said Kapil Kaul, South Asia CEO for CAPA Centre for Aviation, adding no one should expect instant results.

https://www.seattletimes.com/business/b ... urbulence/

You cannot be in the press only because a risk model is flagging you. I personally didn't see much new in the link, but now the Western press is reporting.

Have the conference call Jet!
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kiowa
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Re: Jet Airways: reports cash running out

Fri Aug 10, 2018 11:08 pm

CaliguyNYC wrote:
But wasn't Jet stupid to announce they are running out of cash? Or if they went to the unions and the unions leaked it, then the unions are dumb. The full Jet running out of cash could have been better handled. In general Indian aviation is sloppy and the press only adds to the weirdness. How can anyone really succeed in an crazy environment. What's next the MH govt saying fuel prices are up so we want to raise aviation tax as well?

That would be the play in the US.
 
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lightsaber
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Re: Jet Airways: reports cash running out

Sat Aug 11, 2018 12:13 pm

Jet Airways notes paying debt on time:

https://www.bloomberg.com/news/articles ... -pressures

My input: Correct the quarterly report by removing whatever error the auditing committee found. Obviously Jet is having to assure the stock market. Timely transparent financial data is the best solution.
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BawliBooch
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Re: Jet Airways: reports cash running out

Sun Aug 12, 2018 2:43 am

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


Indigo ? Vistara ?

REALLY?

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

Something is missing somewhere....


Jet has shown remarkable flexibility right from day one. That is the reason they have outlived all of the upstarts that have come up from time to time - Eastwest, Damania, Sahara, KingFisher and now Indigo.

The BRU scissor-hub was a very good idea, but the DL/AF "cooperation" made AMS+CDG combo more profitable in the long run. Jet has also shown remarkable flexibility in being able to keep assets flying by placing them with other airlines in the down phase. Goyal's huge list of contacts in airline industry proved useful to ensure that.

This the reason Jet Airways will outlast the other new kabootars that keep popping up from time to time. People tend to forget that at one Eastwest was considered unbeatable. As was Kingfisher! None of them survived. And despite what Banwarilal is whispering these days in the ears of the PR journalists, Jet will outlast Indigo as well.
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lightsaber
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Re: Jet Airways: reports cash running out

Sun Aug 12, 2018 3:08 pm

Jet is being audited:
https://www.outlookindia.com/website/st ... ort/314922

With all the press, we can't be surprised. I hope they are able to recapitalize.

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unrave
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Re: Jet Airways: reports cash running out

Sun Aug 12, 2018 11:37 pm

Some real insider information: Jet has given the mandate to a couple of investment banks to raise approx. $300m by the next 2-3 months to tide over the cash crunch. As far as I know, the last time they did this (unsuccessfully) was in 2013 prior to the equity infusion from Etihad. Back then the credit profile of Jet was poorer than it is now, and the IBs were not able to place the debt. Etihad's money was a literal life saver. Let see where the money comes from this time.
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unrave
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 4:39 am

Media has picked up on this: (Video)
https://economictimes.indiatimes.com/in ... 380970.cms
-Bulge bracket investment banks have been roped in to raise $350-$400m from global investors.

This is significant because NG will lose majority ownership of the airline, something that Indian promoters are very very hesitant to do. In my opinion that will be the best thing to happen as finally the management can function without interference.

However there is an issue The present market cap of 9W is hardly $400m, even if it were to get a premium of 100% (highly generous), if the airline has to raise $300-$350m NG's share will be highly diluted. Will he put his personal considerations aside for the sake of his airline?
India: World's fastest growing major economy. World's fastest growing aviation market.
 
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lightsaber
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 12:09 pm

unrave wrote:
Media has picked up on this: (Video)
https://economictimes.indiatimes.com/in ... 380970.cms
-Bulge bracket investment banks have been roped in to raise $350-$400m from global investors.

This is significant because NG will lose majority ownership of the airline, something that Indian promoters are very very hesitant to do. In my opinion that will be the best thing to happen as finally the management can function without interference.

However there is an issue The present market cap of 9W is hardly $400m, even if it were to get a premium of 100% (highly generous), if the airline has to raise $300-$350m NG's share will be highly diluted. Will he put his personal considerations aside for the sake of his airline?

I do not believe he has a choice but to swallow his pride and accept someone else will start 'helping' run the airline.

Jet needs the money to keep flying. How can you get to a quarterly report and be in such bad shape you have to cancel a pre-schedule conference call? However, Jet Paid all of July's bills (per PR, a wise move). That said, IMHO all the evidence points to a surplus of premium capacity in India.

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Antarius
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 1:05 pm

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


Indigo ? Vistara ?

REALLY?

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

Something is missing somewhere....


Jet has shown remarkable flexibility right from day one. That is the reason they have outlived all of the upstarts that have come up from time to time - Eastwest, Damania, Sahara, KingFisher and now Indigo.

The BRU scissor-hub was a very good idea, but the DL/AF "cooperation" made AMS+CDG combo more profitable in the long run. Jet has also shown remarkable flexibility in being able to keep assets flying by placing them with other airlines in the down phase. Goyal's huge list of contacts in airline industry proved useful to ensure that.

This the reason Jet Airways will outlast the other new kabootars that keep popping up from time to time. People tend to forget that at one Eastwest was considered unbeatable. As was Kingfisher! None of them survived. And despite what Banwarilal is whispering these days in the ears of the PR journalists, Jet will outlast Indigo as well.


East West had 8 aircraft. Comparing them to 6E or any of the major players now is ridiculous.

This post sounds like the Nokia fan boys pooh poohing at apple in 2007/2008.
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CaliguyNYC
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 1:07 pm

unrave wrote:
Media has picked up on this: (Video)
https://economictimes.indiatimes.com/in ... 380970.cms
-Bulge bracket investment banks have been roped in to raise $350-$400m from global investors.

This is significant because NG will lose majority ownership of the airline, something that Indian promoters are very very hesitant to do. In my opinion that will be the best thing to happen as finally the management can function without interference.

However there is an issue The present market cap of 9W is hardly $400m, even if it were to get a premium of 100% (highly generous), if the airline has to raise $300-$350m NG's share will be highly diluted. Will he put his personal considerations aside for the sake of his airline?


It is a debt placement not equity. Debt does not usually affect ownership / control. This is just a loan. Too bad India doesn't allow foreigns to give these loans.
 
hohd
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 1:21 pm

Jet Airways may have to put BOM-MAN on hold, the timings are horrible anyway for any meaningful connections in India. Also in India there are too many domestic airlines. 6E dumps capacity on almost every route, granted they created many new routes, there has to be a moratorium on domestic flights from BOM, DEL and BLR (and may be even MAA, CCU and HYD) due to congestion unless it is to a destination not served previously. This might help Jet and AI who have hubs in BOM and DEL. When they fly internationally to nearby countries, they fly the same routes - however not a single airline is flying to Malaysia.
 
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BawliBooch
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 1:25 pm

Antarius wrote:
East West had 8 aircraft. Comparing them to 6E or any of the major players now is ridiculous.

You are missing the point. Relative to the size of the market at the time, East West was a major player just like Indigo is today. East West had 9 Boeings (8x737-200, 1x737-400) and 4 F27's. This, at a time when the main competitor was state run Indian Airlines which had 53 aircraft total. Jet Airways had 5 737-300's and a single -500. Much smaller market than it is today.

Kingfisher in 2009 also had close to 35%+ market share after Deccan acquisition when it started falling through. They were a major player then and if you search the posts on this very forum, many of the fanboys then were saying the same things about KF then that we are now hearing about 6E.

hohd wrote:
6E dumps capacity on almost every route, granted they created many new routes, there has to be a moratorium on domestic flights from BOM, DEL and BLR (and may be even MAA, CCU and HYD) due to congestion unless it is to a destination not served previously. This might help Jet and AI who have hubs in BOM and DEL. When they fly internationally to nearby countries, they fly the same routes - however not a single airline is flying to Malaysia.

But 6E's entire business plan is based on that idea - to dump capacity and force competitors off routes. Unfortunately for them, the competitors are not folding up and yields are in the toilet.

They are cash-rich as of now - but there is only so much money to be sourced from the tax havens in Mauritius, Macau & Isle of Mann. That will run out sooner than the fan boys think. And then what?

Antarius wrote:
This post sounds like the Nokia fan boys pooh poohing at apple in 2007/2008.

I would avoid the personal jibes. They dont contribute to a healthy debate. Let us keep it civil! :shhh:
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BawliBooch
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 1:34 pm

Some people are trying to create a scare situation through planted articles like these, making it appear like Jet is going belly up which is just not true. The memories of Kingfishers dramatic fall are still fresh.

PR hatchet jobs like these which suggest Jet is going out of business do impact forward bookings. Its a good thing, Jet has clarified the situation on Social Media as well by directly reaching out to their FF.

But still the negative story mongering continues on forums like these. :(
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unrave
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 1:51 pm

CaliguyNYC wrote:
unrave wrote:
Media has picked up on this: (Video)
https://economictimes.indiatimes.com/in ... 380970.cms
-Bulge bracket investment banks have been roped in to raise $350-$400m from global investors.

This is significant because NG will lose majority ownership of the airline, something that Indian promoters are very very hesitant to do. In my opinion that will be the best thing to happen as finally the management can function without interference.

However there is an issue The present market cap of 9W is hardly $400m, even if it were to get a premium of 100% (highly generous), if the airline has to raise $300-$350m NG's share will be highly diluted. Will he put his personal considerations aside for the sake of his airline?


It is a debt placement not equity. Debt does not usually affect ownership / control. This is just a loan. Too bad India doesn't allow foreigns to give these loans.

The very headline says stake sale. Trust me 9W is in no position to borrow $300m more.
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unrave
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 2:06 pm

hohd wrote:
6E dumps capacity on almost every route, granted they created many new routes, there has to be a moratorium on domestic flights from BOM, DEL and BLR (and may be even MAA, CCU and HYD) due to congestion unless it is to a destination not served previously. This might help Jet and AI who have hubs in BOM and DEL. When they fly internationally to nearby countries, they fly the same routes - however not a single airline is flying to Malaysia.

The WTO definition of dumping is selling below cost, last time I checked IndiGo's RASK is higher than its CASK, and even if it weren't so it is not illegal in India. And why should the govt interfere and restrict addition of flights from any airport? Let the competitors battle to death.

Jet used to fly MAA-KUL until very recently but couldn't compete with the LCCs of Malaysia. Unlike SIN, the traveller profile to KUL consists almost entirely of migrant labour with little business traffic. Air Asia has a very lean operation with a cost structure that is lower than even IndiGo's, Indian airlines stand no chance against it.
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binayak
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 2:43 pm

BawliBooch wrote:
Antarius wrote:
East West had 8 aircraft. Comparing them to 6E or any of the major players now is ridiculous.

You are missing the point. Relative to the size of the market at the time, East West was a major player just like Indigo is today. East West had 9 Boeings (8x737-200, 1x737-400) and 4 F27's. This, at a time when the main competitor was state run Indian Airlines which had 53 aircraft total. Jet Airways had 5 737-300's and a single -500. Much smaller market than it is today.


Didn't 9W have the 737 400 too? I remember traveling in it multiple times after '96. Before that I didn't have much knowledge of planes so can't remember the aircraft type.
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Antarius
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 2:46 pm

BawliBooch wrote:
Antarius wrote:
East West had 8 aircraft. Comparing them to 6E or any of the major players now is ridiculous.

You are missing the point. Relative to the size of the market at the time, East West was a major player just like Indigo is today. East West had 9 Boeings (8x737-200, 1x737-400) and 4 F27's. This, at a time when the main competitor was state run Indian Airlines which had 53 aircraft total. Jet Airways had 5 737-300's and a single -500. Much smaller market than it is today.

Kingfisher in 2009 also had close to 35%+ market share after Deccan acquisition when it started falling through. They were a major player then and if you search the posts on this very forum, many of the fanboys then were saying the same things about KF then that we are now hearing about 6E.

hohd wrote:
6E dumps capacity on almost every route, granted they created many new routes, there has to be a moratorium on domestic flights from BOM, DEL and BLR (and may be even MAA, CCU and HYD) due to congestion unless it is to a destination not served previously. This might help Jet and AI who have hubs in BOM and DEL. When they fly internationally to nearby countries, they fly the same routes - however not a single airline is flying to Malaysia.

But 6E's entire business plan is based on that idea - to dump capacity and force competitors off routes. Unfortunately for them, the competitors are not folding up and yields are in the toilet.

They are cash-rich as of now - but there is only so much money to be sourced from the tax havens in Mauritius, Macau & Isle of Mann. That will run out sooner than the fan boys think. And then what?

Antarius wrote:
This post sounds like the Nokia fan boys pooh poohing at apple in 2007/2008.

I would avoid the personal jibes. They dont contribute to a healthy debate. Let us keep it civil! :shhh:


Addressing your 3 points in sequence

1. The economics are still fundamentally different between a 9 aircraft carrier and a 100+ aircraft one. East West was a one man startup show. The airlines in India now (several of them) have been around for longer, operate larger fleets and also therefore have more fault tolerance/elasticity.

6E and 9W etc. have operations of scale now. Which gives them some flexibility to absorb the peaks and valleys of the industry. It isn't an apples to apples comparison.

2. If RASK is above CASK, how can we call this dumping? They may well be flooding the market at prices that airlines with higher CASK cannot sustain, but if they are making money (even if less than otherwise), this is not dumping.

3. It wasn't intended as a personal attack. Merely a comparison to another parallel where an upstart gained momentum. The incumbent realized far too late.
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BawliBooch
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 2:51 pm

People underestimate NG's skills! Naresh has vast connections in the airline industry from his days handling GSA's for many international airlines.

Jet Airways is not going anywhere! :P

Save this post!
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BawliBooch
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 2:55 pm

UNCONFIRMED REPORTS - Jet is leasing 7x 737-800's to the national carrier of an Indian Ocean country. 2 more 77W's are said to be heading to a Middle Eastern carrier.

Perhaps it would make sense for Jet to lease out the 77W's to various airlines needing the capacity - it is just too much plane for their needs. They should structure their LH ops around the A330-300 with its cheaper cash-cost.
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binayak
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 3:47 pm

BawliBooch wrote:
UNCONFIRMED REPORTS - Jet is leasing 7x 737-800's to the national carrier of an Indian Ocean country. 2 more 77W's are said to be heading to a Middle Eastern carrier.

Perhaps it would make sense for Jet to lease out the 77W's to various airlines needing the capacity - it is just too much plane for their needs. They should structure their LH ops around the A330-300 with its cheaper cash-cost.


Just a moment. Last year multiple times jet airways said that they were able to utilize the 77Ws well thanks to AF KL joint venture. In fact after removing F they will be even better utilized. One of the reasons why jet needs cash - refurbishing wide bodies.
But you said that it's unconfirmed report, so I think this won't happen. An airline for who int'l ops are significant contribution to revenues, won't reduce capacity in long haul flights. The 77W is no longer too much plane for their needs.
For further int'l expansion, a332 will be excellent choice along with the ordered 789s.
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 3:56 pm

Jet Airways accounts have been placed in SMA-1 and SMA-2 watchlist says SBI chairman
https://economictimes.indiatimes.com/in ... 380716.cms

It is strange that this news didn't get traction. For the unaware: SMA (Special Monitoring Account) 1 and 2 are classifications used by Indian banks when a particular loan repayment/interest servicing gets overdue by 30 days and 60 days respectively. This piece of information divulged by the SBI chairman at the earnings call points to some very serious issues at Jet.
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 4:08 pm

binayak wrote:
Just a moment. Last year multiple times jet airways said that they were able to utilize the 77Ws well thanks to AF KL joint venture. In fact after removing F they will be even better utilized. One of the reasons why jet needs cash - refurbishing wide bodies.
But you said that it's unconfirmed report, so I think this won't happen. An airline for who int'l ops are significant contribution to revenues, won't reduce capacity in long haul flights. The 77W is no longer too much plane for their needs.
For further int'l expansion, a332 will be excellent choice along with the ordered 789s.


The elimination of F on the 77W's will take 2 years atleast given the past timelines for such projects. Jet needs cash NOW.

How many 77W's do they need for their ops? 4 at most for the BOM/DEL-LHR run. The other routes can be replaced by the A330-300's some of which are currently doing domestic runs. The airlines 77W's are the lower MTOW version AFAIK, which reduces their potential utility.

7x 737-800's are leaving this year for sure, heading for a airline based in Indian Ocean region. Are they receiving 7 MAX's this year to replace these exiting 737's?
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 5:51 pm

I have to agree with others, an airline expanding where RASK>CASK during low season isn't dumping. It is the high CASK airlines to put costs under control.

Last quarter was brutal. Thankfully Indigo has a good enough quarterly

BawliBooch wrote:
UNCONFIRMED REPORTS - Jet is leasing 7x 737-800's to the national carrier of an Indian Ocean country. 2 more 77W's are said to be heading to a Middle Eastern carrier.

Perhaps it would make sense for Jet to lease out the 77W's to various airlines needing the capacity - it is just too much plane for their needs. They should structure their LH ops around the A330-300 with its cheaper cash-cost.

I 100% agree the 77W is too much aircraft. To fill it requires excellent international to international connections and... That hasn't happened.

Leasing out 738s is interesting. I must think about that more.

I'm looking forward to the Q&A portion of the conference call once it happens.

Lightsaber
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 6:08 pm

BawliBooch wrote:
7x 737-800's are leaving this year for sure, heading for a airline based in Indian Ocean region. Are they receiving 7 MAX's this year to replace these exiting 737's?


They did lease 12 from GECAS. Deliveries started in June so they should be getting a few MAX 8s this year.

Unsure if it is up to 7 though.
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 6:10 pm

unrave wrote:
CaliguyNYC wrote:
unrave wrote:
Media has picked up on this: (Video)
https://economictimes.indiatimes.com/in ... 380970.cms
-Bulge bracket investment banks have been roped in to raise $350-$400m from global investors.

This is significant because NG will lose majority ownership of the airline, something that Indian promoters are very very hesitant to do. In my opinion that will be the best thing to happen as finally the management can function without interference.

However there is an issue The present market cap of 9W is hardly $400m, even if it were to get a premium of 100% (highly generous), if the airline has to raise $300-$350m NG's share will be highly diluted. Will he put his personal considerations aside for the sake of his airline?


It is a debt placement not equity. Debt does not usually affect ownership / control. This is just a loan. Too bad India doesn't allow foreigns to give these loans.

The very headline says stake sale. Trust me 9W is in no position to borrow $300m more.


Nothing will happen unless Goyal is willing to reduce his equity to around 25%. Last time, he managed to cut a deal with Etihad and Hogan. The guys who are on table now will be a bit more sophisticated.
 
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 6:23 pm

Antarius wrote:
6E and 9W etc. have operations of scale now. Which gives them some flexibility to absorb the peaks and valleys of the industry. It isn't an apples to apples comparison.

Depends on how you read it.

KF had touched a peak of 40% market share at one time with 58 aircraft (not counting the A330) - ofcourse a much smaller market then . It didnt take too long for that to come down to zero.

The only thing that Indigo has going for it now is the mythical stash of cash it is supposedly sitting on. Kingfisher was supposed to enjoy the same benefit a decade ago courtesy Mr.Deep Pockets Mallya of UB fame. Reference the glowing articles written by Ms.Bhattacharya on Kingfisher from a decade ago. As Mallya found out in 2012, the supply of cash from Mauritius & Macau can dry up in an instant. Indigo is built on the same precarious model.

The way I see it, Jet has a more competent team which has seen the airline through tough times before. Jet/AI will ride this one out. Indigo, OTOH, will not last another negative cycle.
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 6:30 pm

lightsaber wrote:

BawliBooch wrote:
UNCONFIRMED REPORTS - Jet is leasing 7x 737-800's to the national carrier of an Indian Ocean country. 2 more 77W's are said to be heading to a Middle Eastern carrier.

Perhaps it would make sense for Jet to lease out the 77W's to various airlines needing the capacity - it is just too much plane for their needs. They should structure their LH ops around the A330-300 with its cheaper cash-cost.

I 100% agree the 77W is too much aircraft. To fill it requires excellent international to international connections and... That hasn't happened.

Leasing out 738s is interesting. I must think about that more.

I'm looking forward to the Q&A portion of the conference call once it happens.

Lightsaber


You are missing the point.
The 777-300ER is no longer "too large aircraft " for jet airways.
Had that been the case then they wouldn't have deployed all of them for ops after getting back from EY last year. They have significantly increased crew for 77W. Now if they again lease the aircrafts then all their investments will be in vain leading to more losses.
Today jet airways is able to profitably fill up the 77W for flights to CDG, AMS, LHR, HKG. For an airline whose int'l ops are significant contribution to revenues earned, do you think they should reduce int'l capacity or continue int'l expansion? Int'l to int'l connections are excellent in AMS, CDG. That's what has lead to utilizing these aircrafts there.


Leasing out 738s is indeed an excellent idea given that those planes are being replaced by 737max . 11 MAX will enter the fleet by next march . Jet airways will grow itself at 10% yearly as per the CEO.
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 11:19 pm

Jet looks to sell FF program:
https://www.financialexpress.com/indust ... n/1279828/

What amazes me is how there is never discussion on what it costs the airline. The list control of a branded credit card and pay fees to there own FF program.

It is an asset to sell. But is not free money. I wonder if EY will sell there share to start cashing out...

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unrave
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Re: Jet Airways: reports cash running out

Mon Aug 13, 2018 11:39 pm

lightsaber wrote:
Jet looks to sell FF program:
https://www.financialexpress.com/indust ... n/1279828/

What amazes me is how there is never discussion on what it costs the airline. The list control of a branded credit card and pay fees to there own FF program.

It is an asset to sell. But is not free money. I wonder if EY will sell there share to start cashing out...

Lightsaber


Jet will be grossly disappointed if they believe they can sell their FF programme for as much as they think it is worth. The last time EY paid $150m for a 50% stake but that was a backdoor means of buying into Jet as they reached the regulatory cap of 26%. Other investors will not value the programme as highly.
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Re: Jet Airways: reports cash running out

Tue Aug 14, 2018 1:34 am

unrave wrote:
lightsaber wrote:
Jet looks to sell FF program:
https://www.financialexpress.com/indust ... n/1279828/

What amazes me is how there is never discussion on what it costs the airline. The list control of a branded credit card and pay fees to there own FF program.

It is an asset to sell. But is not free money. I wonder if EY will sell there share to start cashing out...

Lightsaber


Jet will be grossly disappointed if they believe they can sell their FF programme for as much as they think it is worth. The last time EY paid $150m for a 50% stake but that was a backdoor means of buying into Jet as they reached the regulatory cap of 26%. Other investors will not value the programme as highly.

I cannot find a reason anyone would bid as high as EY either... It is actually expensive cash to sell a FF program... but we're getting off topic. Whatever it is worth, it will go at a discount. Probably to someone buying into the airline to.

Selling some aircraft is wise.
Monetizing the FF program has significant long term costs (fees, loss of control), but is a means of garnering cash.
Some of the company will have to be sold. Meh... A blow to the ego, but recoverable. Assuming one keeps the job... :duck:

What matters is restructuring a business quickly to keep it flying.

LIghtsaber

Late edit:
Apparently 9W has a minimum profit clause on at least one of its loans it will violate. So it is asking for exception:
https://www.moneycontrol.com/news/busin ... 40671.html
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Re: Jet Airways: reports cash running out

Tue Aug 14, 2018 9:40 am

Tarun Shukla (ET aviation analyst) has tweeted that state run banks aren't too keen to extend further credit to Jet; airline now looking at overseas fund raising options.

Here's an article which argues what we already know: Let go or die
https://swarajyamag.com/business/jets-g ... nk-with-it
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Re: Jet Airways: reports cash running out

Tue Aug 14, 2018 10:40 am

NG created and destroyed 9W. I heard the new DL CEO at 9W is totally incapable of understanding Indian culture. Apparently, his American style view of going to the Unions and the cash scare is what created this downward news cycle. Is this true?

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Re: Jet Airways: reports cash running out

Tue Aug 14, 2018 12:00 pm

abrelosojos wrote:
NG created and destroyed 9W. I heard the new DL CEO at 9W is totally incapable of understanding Indian culture. Apparently, his American style view of going to the Unions and the cash scare is what created this downward news cycle. Is this true?

Saludos,
Alex

This is more than a cash scare. 9W is in violation of loan covenants. The issue is the high costs to carry a passenger and thus the inability to thrive during a price war.

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Re: Jet Airways: reports cash running out

Tue Aug 14, 2018 2:59 pm

Morgan Stanley reckons IndiGo will gain from Jet's financial woes
https://www.bloombergquint.com/markets/ ... gs.B_rhx4U

The argument is that financial pressure will cause Jet to slow down capacity addition, leading to improvement in yields and IndiGo will benefit from this
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Re: Jet Airways: reports cash running out

Tue Aug 14, 2018 3:27 pm

unrave wrote:
Morgan Stanley reckons IndiGo will gain from Jet's financial woes
https://www.bloombergquint.com/markets/ ... gs.B_rhx4U

The argument is that financial pressure will cause Jet to slow down capacity addition, leading to improvement in yields and IndiGo will benefit from this


Yes I read it. Wanted to ask something.
Indigo is currently increasing capacity rapidly and has near monopoly in many sectors. They'll continue doing so. So how can improvement in yields of jet help them out. After all jet isn't their only competitor. They have SG, G8 . Plus Vistara is there with its economy lite to price down the key routes from DEL. So even if indigo increases fares, there are players to grab the market. Indigo won't try and give 9W type fares if I'm not wrong. That might not be good idea.

Or it's just benefits being talked about so the benefit indigo will get is adding many routes not any financial benefit?
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Re: Jet Airways: reports cash running out

Wed Aug 15, 2018 1:00 am

Indigo is currently increasing capacity rapidly and has near monopoly in many sectors. [/quote]
Which sectors do they have a near monopoly? They are a late entrant with 40% market share. They shouldn't yet be able to act as a monopoly.

binayak wrote:
They'll continue doing so. So how can improvement in yields of jet help them out. After all jet isn't their only competitor. They have SG, G8 . Plus Vistara is there with its economy lite to price down the key routes from DEL. So even if indigo increases fares, there are players to grab the market. Indigo won't try and give 9W type fares if I'm not wrong. That might not be good idea.

Or it's just benefits being talked about so the benefit indigo will get is adding many routes not any financial benefit?

The market is growing at about 20% per year. You have Indigo, GoAir, Jet, Vistara, and even Air India growing. Any backing off of product provided growth below market growth will boost yield. Since yield is low, the lowest cost providers (Spicejet, GoAir... oh wait...) will benefit the most.

Indigo has detailed quarterly reports and good Q&A sessions, so they get extra attention. Over the last four years, Indigo has made much more money than the competition, so they are usually at first discussion.

Indigo should also cut costs as NEO deliveries get to pace and soon (4th quarter) the A321NEOs arrive.

In a price war, a profitable business should grow quickly.

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Re: Jet Airways: reports cash running out

Wed Aug 15, 2018 1:10 am

lightsaber wrote:
Which sectors do they have a near monopoly? They are a late entrant with 40% market share. They shouldn't yet be able to act as a monopoly.

Lightsaber


With their expansion they do have near monopoly in many sectors. Look at Surat, they now have a pan India network out of there.
A friend of mine lives in Assam, and indigo is the only airline operating at his nearest airport. There are many other such airports in India.
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Re: Jet Airways: reports cash running out

Wed Aug 15, 2018 1:16 am

binayak wrote:
lightsaber wrote:
Which sectors do they have a near monopoly? They are a late entrant with 40% market share. They shouldn't yet be able to act as a monopoly.

Lightsaber


With their expansion they do have near monopoly in many sectors. Look at Surat, they now have a pan India network out of there.
A friend of mine lives in Assam, and indigo is the only airline operating at his nearest airport. There are many other such airports in India.

Are you talking new routes? Where they stimulated the market where there was no prior service? If so, that is only a good thing. If they change too much, GoAir or SpiceJet will join.

There is nothing wrong with first mover advantage (for new routes).

The strategy works as with a low cost basis they can try new routes a la Allegiant and Frontier. If the route doesn't work... switch the aircraft elsewhere with little loss. If a new destination works out, try out more routes as you already have the ground staff and such based there.

I'm trying to figure out the issue...
Since this is a Jet Airways thread, have they kicked anyone off any route?

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Re: Jet Airways: reports cash running out

Wed Aug 15, 2018 1:26 am

IndiGo has a large capacity share in several Tier 2 and Tier 3 airports in India, for example
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Re: Jet Airways: reports cash running out

Wed Aug 15, 2018 1:53 am

lightsaber wrote:
Are you talking new routes? Where they stimulated the market where there was no prior service? If so, that is only a good thing. If they change too much, GoAir or SpiceJet will join.

There is nothing wrong with first mover advantage (for new routes).

The strategy works as with a low cost basis they can try new routes a la Allegiant and Frontier. If the route doesn't work... switch the aircraft elsewhere with little loss. If a new destination works out, try out more routes as you already have the ground staff and such based there.

I'm trying to figure out the issue...
Since this is a Jet Airways thread, have they kicked anyone off any route?

Lightsaber


So when did I say that was wrong? Of course it's good for tier 2 cities as that's their only air connectivity. I was just trying to figure out that to what extent can 6E benefit or whether they will benefit from 9W's slow capacity addition. BTW for 9W as of now the plans remain the same... 11 MAX by March 2019

Jet airways did kick players off routes during early 2000s. Well at a point their competitor air Deccan was doing the same mistakes people's express did. Well that's history.
In recent past, jet was kicked off from routes by LCCs.
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Re: Jet Airways: reports cash running out

Wed Aug 15, 2018 1:53 pm

Does anyone have any info on whether 6E's ATR routes are profitable or not?

Also speaking about 6E's monopolistic situation, don't they have to worry about airlines like G8- GoAir , which has still stuck to a single type fleet, which might give them a cost advantage and lower CASK (?). G8 seems to have off late enter many of 6E's monopoly routes, however there aren't many announcements of the same when they add new flights. They seem to do things in a very silent fashion.
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