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Jet Airways planes are seen stationed at Chhatrapati Shivaji Maharaj International Airport in Mumbai, India on March 26, 2019 Reuters
The airline, which was on the brink of bankruptcy, was rescued Monday by state-owned banks and forced its chairman, Naresh Goyal, to resign from its board of directors.
Jet Airways investors are delighted by the government's bailout deal this week, but the future of the cash-strapped Indian company appears to be fraught with uncertainty as it may not be easy to convince a new investor to commit.
The airline, which was on the brink of bankruptcy, was rescued on Monday by state-owned banks, which temporarily took a controlling stake in the company, granting it a new loan of $ 218 million and binding its chairman. Naresh Goyal, to resign from the board of directors of the airline he founded 25 years ago.
Jet's shares have risen 20% since the announcement of the rescue, hoping the airline would now be able to suppress wages, redeploy ground planes and recapture market share.
Its future is however far from badured, while a consortium of banks led by the State Bank of India is now rushing to find a new investor and sell its stake in the airline.
This may not be easy, especially since Goyal still holds a 25.5% stake in Jet, which gives him the legal right to block key decisions, including raising funds, issuing new shares and to dilute equity.
If a very wealthy investor is not found soon, Jet may again find it difficult to find funds, as the interim loan granted by banks will not last very long, according to donors and badysts.
"Right now, Jet is in survival mode, there is no strategy," said a leader of one of Jet 's backers. Jet has been in talks with the lessor since the agreement was concluded, but has given little details on the settlement of pending rents and its recovery plans, he said.
"The important thing for us is whether the airline has someone who is patient, capable and has the financial muscle to revive it," he said, adding that his company does Had not decided yet whether she would keep her plane attached to Jet.
Once the leading full-service carrier in India, Jet has struggled to compete with low-cost carriers in recent years. The airline's market share has almost halved, from 21.2% in 2016 to 11.4%, and it has been forced to immobilize about two-thirds of its fleet, resulting in hundreds of deaths. Cancellations of flights.
To get an interactive link on Jet's market share, click https://tmsnrt.rs/2WvDQYi.
For an interactive link on Jet's average daily flights, click https://tmsnrt.rs/2FeFDel.
Indian conglomerate Tata Sons was in talks to invest in Jet on the condition that Goyal withdraws or plays a lesser role, sources told Reuters in November. While the salvage deal could put Tata back into the race, Goyal's small size could still be a problem.
"Do not you create a significant obstacle for potential investors?" said a senior government official in response to the bailout of the bank in which Goyal still has a stake.
India also wants a national investor to replace the banks, which excludes any highly influential contenders like Qatar Airways, but the government-backed National Infrastructure and Investment Fund, whose shareholders also include the Fund. Investment Abu Dhabi, is still in the fray, he said.
The chairman of the State Bank of India, Rajnish Kumar, said that Mr. Goyal would not pose any problem to any new investor, but also said that the former president would be allowed to make an offer on the shares of banks when they are auctioned, leaving a window open to the founder. return.
The bank was not immediately available for comment.
@jetairways No messages. No call. Not even postponed. Please look in this. I have to land in Mumbai tonight. pic.twitter.com/sdO8cwnOaX
– Divya Bhurangi (@DivyaBhurangi) March 30, 2019
Lost trust
In a new sign of its precarious financial situation, just days after the bailout, Jet said Thursday on the Indian stock market that it had defaulted on a loan abroad due to "temporary liquidity constraints". Local media reported that it was a $ 140 million loan.
Safeguarding the airline is crucial for Prime Minister Narendra Modi, who seeks to avoid thousands of job losses before the general election.
"This is only a band-aid until the elections," said a source close to Jet. "We do not know if this bailout will work," he said, adding that Jet was like a hot coal for the banks, which they want to file as soon as possible.
Several Jet pilots, who have not been paid for months, have switched airlines and competing carriers, such as SpiceJet, are in talks with Jet's lessors to take some of its hijacked aircraft, a source to Reuters.
Jet badured the Indian authorities that no more aircraft would be immobilized and that it was in talks with the lenders for a total of 75 aircraft to be returned in the air by the end of April, against about 35 today.
"Current funding measures are short-term and will not garner much confidence as a new investor will not be hired," said Kapil Kaul, Indian CEO of CAPA Aviation Consulting Firm.
"The process of returning the (Jet) fleet to the system might not be easy, especially since the aircraft can be easily deployed to other airlines or markets," he said. said Mr Kaul.
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