CaliguyNYC
Posts: 458
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Re: Jet Airways: reports cash running out

Sat Oct 20, 2018 5:10 pm

dtw2hyd wrote:
Hypothesis

@BawliBooch

Etihad - 24%
Indian individual/institutional investors - 25%
Goyal - 8%
Unknown off-shore investors/guarantors- 43% (Goyal as a proxy, 2013 swap)

For the sale to complete, the buyer has to pay 2013 prices for 43% of shares, I don't see why off-shore guarantors will take a haircut.
Even if the buyer can find funds to complete the sale, it will not fix the underlying problem of lack of working capital.

Several reasons 9W cannot be sold.
1) Indian Banks are not in a position to lend money. Asking for future plans/financial statements is just a cover story.
2) TATAs have no money, Indians seems to take offense with this statement, but it is valid.
3) Singapore has no money. SIA group is barely surviving.
4) Delta has money, but RBI ECB limit rules prohibit Delta from bringing in working capital from outside India.
5) QR is capable, but Qatar-UAE may not play ball to unwind the 43% mess, assuming UAE is the guarantor for the unknown part.
6) No one will pay 2013 markup in 2018 for 9W.

/Hypothesis
Please continue the fact-based discussion.


Not doubting Jet’s ownership structure is probably a mess and even shady. That said, the airline is desperate for a cash investment. So either the 43% people invest more, sell or watch their investment go belly up. I think investors realize that their investment in 2013 is not worth the same today.

On your other points, I won’t argue (since I have no real proof) except point 3 about Singapore is a joke.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Sat Oct 20, 2018 10:12 pm

CaliguyNYC wrote:
So either the 43% people invest more, sell or watch their investment go belly up. I think investors realize that their investment in 2013 is not worth the same today..

So why are they not getting rid of 43%?
This is where Swamy's way-out-there Sovereign Fund-Inventor Bank-Indian Proxy theory seems plausible.
Why would a sovereign fund owning 67% (indirect 43%+ direct 24%) take a cut?
They are not running the airline, there is no direct damage to their image, their financial damage is done.

CaliguyNYC wrote:
except point 3 about Singapore is a joke.

Hint, With TATAs and SIA as parents, Vistara should be swimming in cash, but it is not.
 
CaliguyNYC
Posts: 458
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 12:32 am

dtw2hyd wrote:
CaliguyNYC wrote:
So either the 43% people invest more, sell or watch their investment go belly up. I think investors realize that their investment in 2013 is not worth the same today..

So why are they not getting rid of 43%?
This is where Swamy's way-out-there Sovereign Fund-Inventor Bank-Indian Proxy theory seems plausible.
Why would a sovereign fund owning 67% (indirect 43%+ direct 24%) take a cut?
They are not running the airline, there is no direct damage to their image, their financial damage is done.

CaliguyNYC wrote:
except point 3 about Singapore is a joke.

Hint, With TATAs and SIA as parents, Vistara should be swimming in cash, but it is not.


Sovereign funds are like any other investors (be they institutional investors, private equity or individuals). When your investment goes down in value, you take a cut. Better to get out now when there is a buyer and value rather than 1 year from now after the business gets hurt even more (unless the investors feel the business will rebound(,

I feel like Tatas and SQ are cautiously building vistara. Losing tons of money is not the only growth plan
 
sibibom
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 4:28 am

CaliguyNYC wrote:
dtw2hyd wrote:
CaliguyNYC wrote:
So either the 43% people invest more, sell or watch their investment go belly up. I think investors realize that their investment in 2013 is not worth the same today..

So why are they not getting rid of 43%?
This is where Swamy's way-out-there Sovereign Fund-Inventor Bank-Indian Proxy theory seems plausible.
Why would a sovereign fund owning 67% (indirect 43%+ direct 24%) take a cut?
They are not running the airline, there is no direct damage to their image, their financial damage is done.

CaliguyNYC wrote:
except point 3 about Singapore is a joke.

Hint, With TATAs and SIA as parents, Vistara should be swimming in cash, but it is not.


Sovereign funds are like any other investors (be they institutional investors, private equity or individuals). When your investment goes down in value, you take a cut. Better to get out now when there is a buyer and value rather than 1 year from now after the business gets hurt even more (unless the investors feel the business will rebound(,

I feel like Tatas and SQ are cautiously building vistara. Losing tons of money is not the only growth plan


Sadly Vistara can only grow as much, without prime slots in DEL, BOM and BLR they aren't going to be a premium carrier they aspire to be. They aren't doing as well as others cos they product is too premium for most markets they serve. Getting Jet's slots in the above-said Airports will be a game changer for them.
 
avier
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 5:13 pm

In all this, whatever has to happen, I just hope the Govt. realises that 9W going down under would impact the financial capital the most : the kitty which contributes most to the economy. And the aviation industry (and major airlines ) do contribute to the economy (of the city and country served) greatly. So hope they can help a lending hand to 9W like they did for SG. If a foreign entity (like DL) can rescue the carrier, so be it, hope those restrictive FDI rules regarding working capital don't play spoil sport. And if some Indian buyer like TATA has to acquire, then good for them.
 
AI
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 5:18 pm

I hope 9W survives. UK buying it might work. They can turn 9W into a LCC & expand UK as a FSC.

I don't think we need FSC for Indian domestic routes & India - middle east routes anyway as they are not very long routes.

The quality of employees is something all carriers need to assess as well. They all seem to have too many employees standing around wishing everyone but if you approach anyone with an issue, most seem unable to offer you a solution without speaking to their superior. For a start all/most carriers should be able to reduce their costs by reducing the number of such non-required employees & training the remaining employees to think & take decisions like in the west.
 
RemoFlyer
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 5:26 pm

avier wrote:
In all this, whatever has to happen, I just hope the Govt. realises that 9W going down under would impact the financial capital the most : the kitty which contributes most to the economy. And the aviation industry (and major airlines ) do contribute to the economy (of the city and country served) greatly. So hope they can help a lending hand to 9W like they did for SG. If a foreign entity (like DL) can rescue the carrier, so be it, hope those restrictive FDI rules regarding working capital don't play spoil sport. And if some Indian buyer like TATA has to acquire, then good for them.


I dont get it - why would Delta risk their financial capital going into a corrupt and dysfunctional third-world airline?
 
avier
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 5:45 pm

RemoFlyer wrote:

I dont get it - why would Delta risk their financial capital going into a corrupt and dysfunctional third-world airline?


Im not sure of their "corrupt" status, but whatever they've done, its overall been a good outcome for the country with them having been around for so long.
And in regards to DL, on can also say the same things , and add similar labels like you did for 9W, for their investments in Virgin Atantic or Aeromexico. They realised the importance of those carriers (albeit weak) and their home markets. They knew no other suitable carriers can partner with them in those markets, so they "helped" them by taking a part of them and now perfectly feed their networks.

Same with 9W. If they want to be in India, no other Indian carrier can or will suit them better than 9W. And after all, for what did DL threw all that fuss about on the ME3 and their subsidies? I beileve the main core of that issue was they got the largest slice of the lucrative US-India market, which DL is now majorly vying for.
 
CaliguyNYC
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 6:03 pm

avier wrote:
RemoFlyer wrote:

I dont get it - why would Delta risk their financial capital going into a corrupt and dysfunctional third-world airline?


Im not sure of their "corrupt" status, but whatever they've done, its overall been a good outcome for the country with them having been around for so long.
And in regards to DL, on can also say the same things , and add similar labels like you did for 9W, for their investments in Virgin Atantic or Aeromexico. They realised the importance of those carriers (albeit weak) and their home markets. They knew no other suitable carriers can partner with them in those markets, so they "helped" them by taking a part of them and now perfectly feed their networks.

Same with 9W. If they want to be in India, no other Indian carrier can or will suit them better than 9W. And after all, for what did DL threw all that fuss about on the ME3 and their subsidies? I beileve the main core of that issue was they got the largest slice of the lucrative US-India market, which DL is now majorly vying for.


Very well said. I would add the reason DL invested in GOL, Virgin, AMexico was because all those countries have large sources of pax. Local carriers always have an edge. US3 will always be the first stop for the majority of Americans. Same will go for India. For what ever reason (and we can talk about all the conspiracies), INdian carriers haven’t tried to build local loyalty. DL having a stake in a strong Indian carrier will help DL tremendously. That is why DL, AF, KL, VS have played so well with 9W (meaning making transatlantic seats available to 9W on the cheap). The notion that the ME3 would be India’s dominant foreign carriers, could only be true if they somehow hamper Indian aviation. Large source countries will always prevail. Look at China who’s airlines WERE so much worse than Indian ones. But yet they have strong networks today. Here’s hoping the Tatas get 9W and they continue to be heavily partnered with DL/AF or some airline that helps them for pax traveling to the west.
 
VictorKilo
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 7:27 pm

So if 9W is running out of cash, what’s the incentive for Tata to buy a stake now? Why not wait until bankruptcy and just pick up the parts they want and not the leases they don’t (plus whatever parts a partner investor airline would want them to operate)?
 
VTORD
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 8:52 pm

AI wrote:
They can turn 9W into a LCC & expand UK as a FSC.

That is literally the last thing that they should do. You do not want a repeat of the Jet-JetLite-JetKonnect nonsense
Twitter: @spottingfoodie
 
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lightsaber
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Re: Jet Airways: reports cash running out

Sun Oct 21, 2018 10:40 pm

VictorKilo wrote:
So if 9W is running out of cash, what’s the incentive for Tata to buy a stake now? Why not wait until bankruptcy and just pick up the parts they want and not the leases they don’t (plus whatever parts a partner investor airline would want them to operate)?

The customer base, slots, and the operating entity.

But they only want full control:
https://m.businesstoday.in/lite/story/t ... 85770.html

Lightsaber
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lutfi
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Re: Jet Airways: reports cash running out

Mon Oct 22, 2018 12:42 am

avier wrote:
In all this, whatever has to happen, I just hope the Govt. realises that 9W going down under would impact the financial capital the most : the kitty which contributes most to the economy. And the aviation industry (and major airlines ) do contribute to the economy (of the city and country served) greatly. So hope they can help a lending hand to 9W like they did for SG. If a foreign entity (like DL) can rescue the carrier, so be it, hope those restrictive FDI rules regarding working capital don't play spoil sport. And if some Indian buyer like TATA has to acquire, then good for them.


If Jet goes under, the other Indian airlines can adjust their schedules pretty fast to grab the BOM slots. Might take some time before they have crew bases etc. in place, but they will be happy to bear extra costs (hotels/ positioning flights) for slots at the financial capital. I think the impact will be minor and temporary
 
Antarius
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Re: Jet Airways: reports cash running out

Mon Oct 22, 2018 1:01 am

VTORD wrote:
AI wrote:
They can turn 9W into a LCC & expand UK as a FSC.

That is literally the last thing that they should do. You do not want a repeat of the Jet-JetLite-JetKonnect nonsense


This was the absolute worst. I had a ticket on JetKonnect (or was it Lite), booked through 9W. It was treated as so bassackwards codeshare with no ability to view my actual reservation or select seats.

Terrible.
2018: AUA CLT IAH HOU DFW COS DEN CLL ORD PEK PVG PHX SFO SJC OAK PHL YYC STL DTW HNL OGG JFK LGA EWR GIG GRU IGU CWB SDU MDW BOS IAD DCA PBI FLL MIA
 
blrsea
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Re: Jet Airways: reports cash running out

Mon Oct 22, 2018 2:23 am

CaliguyNYC wrote:
avier wrote:
RemoFlyer wrote:

I dont get it - why would Delta risk their financial capital going into a corrupt and dysfunctional third-world airline?


Im not sure of their "corrupt" status, but whatever they've done, its overall been a good outcome for the country with them having been around for so long.
And in regards to DL, on can also say the same things , and add similar labels like you did for 9W, for their investments in Virgin Atantic or Aeromexico. They realised the importance of those carriers (albeit weak) and their home markets. They knew no other suitable carriers can partner with them in those markets, so they "helped" them by taking a part of them and now perfectly feed their networks.

Same with 9W. If they want to be in India, no other Indian carrier can or will suit them better than 9W. And after all, for what did DL threw all that fuss about on the ME3 and their subsidies? I beileve the main core of that issue was they got the largest slice of the lucrative US-India market, which DL is now majorly vying for.


Very well said. I would add the reason DL invested in GOL, Virgin, AMexico was because all those countries have large sources of pax. Local carriers always have an edge. US3 will always be the first stop for the majority of Americans. Same will go for India. For what ever reason (and we can talk about all the conspiracies), INdian carriers haven’t tried to build local loyalty. DL having a stake in a strong Indian carrier will help DL tremendously. That is why DL, AF, KL, VS have played so well with 9W (meaning making transatlantic seats available to 9W on the cheap). The notion that the ME3 would be India’s dominant foreign carriers, could only be true if they somehow hamper Indian aviation. Large source countries will always prevail. Look at China who’s airlines WERE so much worse than Indian ones. But yet they have strong networks today. Here’s hoping the Tatas get 9W and they continue to be heavily partnered with DL/AF or some airline that helps them for pax traveling to the west.


India already extended help when they increased FDI in aviation sector. Foreign airlines can own up to 49% and other foreign entities upto 100%. The rules were changed during the last bust cycle in aviation industry. So there is nothing barring 9W from selling stake to others, foreign or domestic. The ball is in Goyal's court. If he wants to help his company, he should let go of his stake. Thats what many company founders have done. Sell stake and move on. The longer you wait, the lower the valuation will be and less money you will get.
 
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BawliBooch
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Re: Jet Airways: reports cash running out

Mon Oct 22, 2018 2:27 am

dtw2hyd wrote:
6) No one will pay 2013 markup in 2018 for 9W.



Ultimately I think it all boils down to this.

According to the grapevine, Goyal has managed to find an Assamee to bail him out of the current situation.

I must say Goyal has been wise to use this opportunity to further reduce his exposure to "hot money". He had earlier done a major cleanup of the slush money in 2005-2007 and now is using the current "crisis" for a further cleanup. That's wise! Indigo is "cash-rich" as we are often reminded - just like KingFisher in another age. But a lot of this cash is hot money and that leaves them dangerously vulnerable.

People underestimate NG! He has been in the business far longer than the paploo's in the competition. So far atleast, Jet/Goyal is winning this round. Indigo and other vultures circling will just have to wait for another day.
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blrsea
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Re: Jet Airways: reports cash running out

Mon Oct 22, 2018 2:37 am

9W has started cutting some staff .

Jet Airways trims staff, operations to chart away out of financial crisis

At least 15 people at manager or general manager level in departments such as engineering, security and sales have been asked to leave in October, said a person aware of the matter. “A few, but not all of them were aged. There was a lull in September but now the pink slips have begun again,” he said. He reckoned more exits are likely.

The airline has grounded eight of its planes at the Chennai and Mumbai airports. They include an Airbus A330, a Boeing 777, two Boeing 737s and three ATR urboprops at Chennai airport besides one Airbus A330 in Mumbai.

The person cited above said engines have been dismounted from some of these planes, signifying that they may remain grounded for six months or more. There has been speculation about Jet struggling with meeting lease payment obligations.

...
When CEO Vinay Dube joined a year ago, he was given a list of 100 senior or mid-level executives, managerial level and above, that needed to be given “gracious exits”. Until August, about 40 had left. The capacity and workforce cuts reflect Jet’s attempts to stay afloat, even though the former means ceding market share to competitors such as IndiGo, analysts said. It has also delayed salaries several times this year.
...
Image
 
juliuswong
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Re: Jet Airways: reports cash running out

Mon Oct 22, 2018 3:13 am

So the weapon is out that Tata wants NG out should Tata takes over? It seems every time NG takes a back seat, 9W will sink into plethora of trouble, only to be saved again when NG takes over rein and sort out issues on hand again repetitively. One would wonder how the management team operates? Some members here said these are all rivals PR propaganda to bring down 9W, I mean really?? If you can't pay your staff salary on time, that shows something wrong with organisation's financial health.
- Life is a journey, travel it well -
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Tue Oct 23, 2018 12:46 pm

CaliguyNYC wrote:
Sovereign funds are like any other investors (be they institutional investors, private equity or individuals). When your investment goes down in value, you take a cut. Better to get out now when there is a buyer and value rather than 1 year from now after the business gets hurt even more (unless the investors feel the business will rebound(,

I feel like Tatas and SQ are cautiously building vistara. Losing tons of money is not the only growth plan


Hmm, most Chinese PRA investments are loss-making just in for geopolitical reasons. They buy empty airports and ports.

Buying 9W means sinking a couple of $$Billions with one signature on the dotted line. They can just let 9W go under and pickup slots.
 
hohd
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Re: Jet Airways: reports cash running out

Tue Oct 23, 2018 1:21 pm

One of the prime culprits for Jet's woes is Indigo. Indigo's rapid expansion (and many times capacity dumping) in domestic Indian sector and also to nearby countries caused Jet to take losses. Coupled with rising oil prices and Jet's lack of non stop flights to US and Jet's inability to capitalize on the traffic from BOM (where Jet is dominant), which is slot constrained has caused these issues. Currently the only way out is to sell the portion of the 49% allowed to other foreign airlines who are willing to invest.
 
CaliguyNYC
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Re: Jet Airways: reports cash running out

Tue Oct 23, 2018 5:21 pm

hohd wrote:
One of the prime culprits for Jet's woes is Indigo. Indigo's rapid expansion (and many times capacity dumping) in domestic Indian sector and also to nearby countries caused Jet to take losses. Coupled with rising oil prices and Jet's lack of non stop flights to US and Jet's inability to capitalize on the traffic from BOM (where Jet is dominant), which is slot constrained has caused these issues. Currently the only way out is to sell the portion of the 49% allowed to other foreign airlines who are willing to invest.


If 9W goes under it is unlikely that anyone airline will get all the slots. 9W has value (slots, planes, pilots, infrastructure, profitable routes, etc). The question is how much is the value and do the investors / creditors want to sell at that price. Letting 9W go under is bad for the employees, consumers and India. Long before 9W goes under, its valuable pieces would be sold off.
 
bostrv
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Re: Jet Airways: reports cash running out

Tue Oct 23, 2018 5:23 pm

Are slots in Indian airports selleable?
 
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unrave
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 8:42 am

Jet has defaulted on lease rentals: https://www.business-standard.com/artic ... 463_1.html

The airline has virtually no money now.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
Lufthansa
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 10:03 am

unrave wrote:
Jet has defaulted on lease rentals: https://www.business-standard.com/artic ... 463_1.html

The airline has virtually no money now.


I know their product long haul was relatively good, but dealing with them was a nightmare in my experience. Although not as bad as AI.

I know of a situation, due to a time change a guy got stuck at LHR because they couldn't check him in and it was something like
ten minutes (I know this happens at some other airlines as well) .... all they had to do was revalidate the ticket but nobody would do it.
He then no showed through no fault of his own, and someone held seats in for the next day etc etc and the same thing happened 3
days in a row. So, thats why heading to North America the Indian business pax and elite took the likes of Etihad or Lufthansa instead,
unless you happened to be on the one route UA served direct.

It is the world's second largest population. A huge emerging economy doing business globally. Yes the culture is often thrifty but with that many
people there's still enough for an airline that offers a long haul product that has a decent economy and at least one premium cabin. Look what Turkish have
managed to do. Yes Istanbul is a sophisticated place but the company competes with some of the best names in the business, and there's other parts of
Turkey that look like Borat lives there plus there's a war zone literally next door.

India has enough population and business to support a well run global airline. Though as mentioned earlier you can't compare it with the Chinese carriers.....
they're instruments of the state, and a lot of routes are flown for strategic political reasons.
 
vadodara
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 12:02 pm

hohd wrote:
One of the prime culprits for Jet's woes is Indigo. Indigo's rapid expansion (and many times capacity dumping) in domestic Indian sector and also to nearby countries caused Jet to take losses.


Hmm, yes but no. Jet's hub-n-spoke model to funnel pax thru BOM/DEL worked so long as AI was the only competitor. Indigo's success certainly proves that pax wanted a more direct connection, i.e. point-2-point as opposed to 'premium service'. Team Goyal as been a bit slow to get that.

Even worse, operationally, Jet seems rather incapable to mount effective competition.

hohd wrote:
Coupled with rising oil prices and Jet's lack of non stop flights to US and Jet's inability to capitalize on the traffic from BOM (where Jet is dominant), which is slot constrained has caused these issues. Currently the only way out is to sell the portion of the 49% allowed to other foreign airlines who are willing to invest.


Yes, the European 'hub' model does not seem to have panned out. Regarding 'capitalize' on the BOM traffic, if you cannot make money on a supposedly 'premium' traffic on a slot-constrained airport, where in India do you even have a chance to make money?

Seems like Jet's woes go way beyond just the oil price rise.
 
vadodara
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 12:05 pm

CaliguyNYC wrote:
If 9W goes under it is unlikely that anyone airline will get all the slots. 9W has value (slots, planes, pilots, infrastructure, profitable routes, etc). The question is how much is the value and do the investors / creditors want to sell at that price. Letting 9W go under is bad for the employees, consumers and India. Long before 9W goes under, its valuable pieces would be sold off.


You referring to liquidation? Then I concur. In absence of a sound business way of allocating slots, politics is likely to determine who get's the dibs.

I would imagine Tata's have a leg-up here, especially with creditors. The best outcome for Indian banks, who likely lent money to Goyal due to political pressure, is to sell-off to Tata's and get most of their sunk debt.
 
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unrave
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 12:08 pm

Jet has cut three daily flights from Kochi to the Gulf. All is well. NG the magician will conjure cash from thin air.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
76er
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 12:11 pm

vadodara wrote:
Yes, the European 'hub' model does not seem to have panned out.


Maybe so, but KLM CEO Elbers has stated multiple times lately how happy he is with the Jet presence at AMS.
 
CaliguyNYC
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 1:39 pm

This is sort of crazy that this is going on for so long. Why would Jet have not had layoffs and returned planes earlier? Also where are the banks and investors? Seems like Tatas would be a great way for them to save some of their value. Is NG just going to stubbornly stand there as the ship sinks? Sort of makes no sense. But Indian aviation really makes no sense.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 1:43 pm

Ideally, 9W should return/ sell all ATRs, A33Xs, B77Ws and as many 738s as possible.

Get just enough 787s on lease from Etihad and continue to swap 738s with MAXs.
 
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lightsaber
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 1:48 pm

unrave wrote:
Jet has defaulted on lease rentals: https://www.business-standard.com/artic ... 463_1.html

The airline has virtually no money now.

What level of default? It takes 90 days past due to be a non-performing asset. There is an important distinction.
You only have the first amendment with the 2nd. If you're not going to offend someone with what you say, you don't have the 1st.
 
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unrave
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 2:50 pm

dtw2hyd wrote:
Ideally, 9W should return/ sell all ATRs, A33Xs, B77Ws and as many 738s as possible.

Get just enough 787s on lease from Etihad and continue to swap 738s with MAXs.

It is not that they haven't been trying.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
avier
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 4:36 pm

dtw2hyd wrote:
Ideally, 9W should return/ sell all ATRs, A33Xs, B77Ws and as many 738s as possible.



Im not sure by downsizing so much, there would be any value left in the company. When their rivals are expanding to grab all the slots at bigger airports, 9W cutting down would make them lose all their prime slots and will seem to strengthen the competition.

Also, their Int'l segment contributes more to their overall revenues, so I'm not sure where getting soo small would land them.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 5:05 pm

avier wrote:
dtw2hyd wrote:
Ideally, 9W should return/ sell all ATRs, A33Xs, B77Ws and as many 738s as possible.



Im not sure by downsizing so much, there would be any value left in the company. When their rivals are expanding to grab all the slots at bigger airports, 9W cutting down would make them lose all their prime slots and will seem to strengthen the competition.

Also, their Int'l segment contributes more to their overall revenues, so I'm not sure where getting soo small would land them.


Not suggesting to downsize. Just suggesting to improve cash flow by monetizing whatever it has.

Assuming EY (or) DL ready to help with new WB leases, giving away all its WBs and TPs would stabilize their cash flow situation.

In its current financial situation, 9W would never be able to afford to redo WB interiors. Best is to get rid of them and lease 10-12 787s.
 
vadodara
Topic Author
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 7:59 pm

76er wrote:
vadodara wrote:
Yes, the European 'hub' model does not seem to have panned out.


Maybe so, but KLM CEO Elbers has stated multiple times lately how happy he is with the Jet presence at AMS.


That is the DL/KLM model not the NG model. The NG model was to run your own 'hub' in Brussels. The DL/KLM model may have come too late in the day.
 
vadodara
Topic Author
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 8:03 pm

CaliguyNYC wrote:
This is sort of crazy that this is going on for so long. Why would Jet have not had layoffs and returned planes earlier? Also where are the banks and investors? Seems like Tatas would be a great way for them to save some of their value. Is NG just going to stubbornly stand there as the ship sinks? Sort of makes no sense. But Indian aviation really makes no sense.


Um, so long as banks are not arm-twisted in providing yet another 'bridge' loan.

NG's run may be about to end. Just the other day, Essar Steel's lenders seemed to have settled in disposing it off to Arcelor. Not sure at what stage can lenders step in but my guess is soon for Jet.

Essar was around 45,000 crores. By that standards Jet is chump change.
 
AI
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 8:31 pm

Is there any update about Tatas buying majority stake in Jet?
 
klakzky123
Posts: 528
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 8:53 pm

vadodara wrote:
76er wrote:
vadodara wrote:
Yes, the European 'hub' model does not seem to have panned out.


Maybe so, but KLM CEO Elbers has stated multiple times lately how happy he is with the Jet presence at AMS.


That is the DL/KLM model not the NG model. The NG model was to run your own 'hub' in Brussels. The DL/KLM model may have come too late in the day.


I think the KL/DL partnership is probably the reason why 9W is even half-alive at this point. Domestic ops are a huge cash sink at this point and European flights seem to be the only thing working. The Brussels hub was a money loser so at least they seem to be doing ok on European ops now. To your point, if this partnership had been launched earlier, the airline might be on better footing.

But the current relationship seems very one sided. DL, AF, KL and VS are getting the primary benefit. Yes 9W can sell some segments in Europe and the US but I'm honestly not sure how many of those they are even selling while DL/AF/KL/VS are gaining a competitive network in India which they've been lacking relative to UA/LH and AA/BA.
 
YouGeeElWhy
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 9:12 pm

DL needs 9W to make their upcoming JFK/ATL-BOM flight workable. If 9W goes tatas up that plan is likely dead. BA is getting close to UX, so it is unlikely DL would go there. You have to believe that DL would just give up on that new route rather than feed 9W any money that DL must know will go down the drain. Maybe that magic money will save 9W, but it does not look good.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 9:15 pm

klakzky123 wrote:
But the current relationship seems very one sided. DL, AF, KL and VS are getting the primary benefit. Yes 9W can sell some segments in Europe and the US but I'm honestly not sure how many of those they are even selling while DL/AF/KL/VS are gaining a competitive network in India which they've been lacking relative to UA/LH and AA/BA.


As long as Indigo is in business no one can make money in India by selling tickets in India. Sky Team pass-thru for Indian domestic connections may not be that good either.

If 9W wants to a player in Sky Team and make money, connecting as many Indian cities as possible to AMS/CDG/LHR. They can command a premium by connecting unserved airports to Europe. Depending on BOM/DEL or developing one more hub (not to be named) is not the solution. If a WB is too big for a given secondary city, load restricted MAX will do the trick.
 
klakzky123
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 9:27 pm

dtw2hyd wrote:
klakzky123 wrote:
But the current relationship seems very one sided. DL, AF, KL and VS are getting the primary benefit. Yes 9W can sell some segments in Europe and the US but I'm honestly not sure how many of those they are even selling while DL/AF/KL/VS are gaining a competitive network in India which they've been lacking relative to UA/LH and AA/BA.


As long as Indigo is in business no one can make money in India by selling tickets in India. Sky Team pass-thru for Indian domestic connections may not be that good either.

If 9W wants to a player in Sky Team and make money, connecting as many Indian cities as possible to AMS/CDG/LHR. They can command a premium by connecting unserved airports to Europe. Depending on BOM/DEL or developing one more hub (not to be named) is not the solution. If a WB is too big for a given secondary city, load restricted MAX will do the trick.


They need a JV relationship with the above. The existing codeshare relationship just gives AF/KL/DL/VS a nice expanded network to India with little risk. None of the four are paying for any of the operations. None of them are helping 9W with rising fuel costs or labor issues. Those airlines can just take a small margin on each ticket and be happy that they have a relevant network in India (without taking on any risk).

9W needs the four to actually share in the cost of operation. 9W is the one providing the key set of India flights that none of them have today. The connections that AF/KL and DL provide are nice but 9W is the one providing the real value in this relationship. And while 9W might be making money from the relationship since they're able to fill planes thanks to the four airlines, they should be getting a lot more out of this.

But yes, the domestic ops are a disaster and at this point they might have to bail on those. I'm not sure how much connecting traffic they get onto the international flights but they'd be better off forming an interline agreement with one of the LCCs and bailing from the domestic market. India is still heavily driven by travel agents so an interline agreement will help cover any feed for international flights.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 9:59 pm

klakzky123 wrote:
They need a JV relationship with the above. The existing codeshare relationship just gives AF/KL/DL/VS a nice expanded network to India with little risk. None of the four are paying for any of the operations. None of them are helping 9W with rising fuel costs or labor issues. Those airlines can just take a small margin on each ticket and be happy that they have a relevant network in India (without taking on any risk).

9W needs the four to actually share in the cost of operation. 9W is the one providing the key set of India flights that none of them have today. The connections that AF/KL and DL provide are nice but 9W is the one providing the real value in this relationship. And while 9W might be making money from the relationship since they're able to fill planes thanks to the four airlines, they should be getting a lot more out of this.

But yes, the domestic ops are a disaster and at this point they might have to bail on those. I'm not sure how much connecting traffic they get onto the international flights but they'd be better off forming an interline agreement with one of the LCCs and bailing from the domestic market. India is still heavily driven by travel agents so an interline agreement will help cover any feed for international flights.


DL management would love to have a JV with 9W. If AF/KL performed as expected by DL ie., have a wide network in India, we wouldn't be discussing this.

DL has two problems, 1) AF 2) Delta unions.

9W codeshare is a highwire act by DL, not to upset JV partners and its own unions.
 
vadodara
Topic Author
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Re: Jet Airways: reports cash running out

Mon Oct 29, 2018 11:54 pm

klakzky123 wrote:
vadodara wrote:
76er wrote:

Maybe so, but KLM CEO Elbers has stated multiple times lately how happy he is with the Jet presence at AMS.


That is the DL/KLM model not the NG model. The NG model was to run your own 'hub' in Brussels. The DL/KLM model may have come too late in the day.


I think the KL/DL partnership is probably the reason why 9W is even half-alive at this point. Domestic ops are a huge cash sink at this point and European flights seem to be the only thing working. The Brussels hub was a money loser so at least they seem to be doing ok on European ops now. To your point, if this partnership had been launched earlier, the airline might be on better footing.

But the current relationship seems very one sided. DL, AF, KL and VS are getting the primary benefit. Yes 9W can sell some segments in Europe and the US but I'm honestly not sure how many of those they are even selling while DL/AF/KL/VS are gaining a competitive network in India which they've been lacking relative to UA/LH and AA/BA.


Well for 9W to make it 'more even', it needs to imitate what DL is doing. DL initially added flights from DL hubs to AMS. It now has added flights from other 'non-hub' large cities. 9W was rather busy building 'BOM' hub. It should have instead added AMS or CDG or LHR flights from likes of MAA/BLR/HYD/AMD and so forth to gain incremental traffic plus some local point to point traffic.

9W, after all is a bit player c.w. Delta. These days, it is even a bit player c.w. Indigo. One needs to be a little smarter as how to pick your battles.
 
Antarius
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 12:05 am

unrave wrote:
dtw2hyd wrote:
Ideally, 9W should return/ sell all ATRs, A33Xs, B77Ws and as many 738s as possible.

Get just enough 787s on lease from Etihad and continue to swap 738s with MAXs.

It is not that they haven't been trying.


The stage length of a lot of 9Ws routes are short enough to be economical in the 738. So selling a 738 just to replace it with a MAX isn't a silver bullet.
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smartplane
Posts: 168
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 12:15 am

lightsaber wrote:
unrave wrote:
Jet has defaulted on lease rentals: https://www.business-standard.com/artic ... 463_1.html

The airline has virtually no money now.

What level of default? It takes 90 days past due to be a non-performing asset. There is an important distinction.

You are referring to accounting and reporting standards, and treatment thereof. Generally not 90 days grace period for standard aircraft finance and leasing covenants.
 
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unrave
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 2:01 am

lightsaber wrote:
What level of default? It takes 90 days past due to be a non-performing asset. There is an important distinction.

Even a one day one rupee delay is technically a default.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
CaliguyNYC
Posts: 458
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 2:28 am

vadodara wrote:
klakzky123 wrote:
vadodara wrote:

That is the DL/KLM model not the NG model. The NG model was to run your own 'hub' in Brussels. The DL/KLM model may have come too late in the day.


I think the KL/DL partnership is probably the reason why 9W is even half-alive at this point. Domestic ops are a huge cash sink at this point and European flights seem to be the only thing working. The Brussels hub was a money loser so at least they seem to be doing ok on European ops now. To your point, if this partnership had been launched earlier, the airline might be on better footing.

But the current relationship seems very one sided. DL, AF, KL and VS are getting the primary benefit. Yes 9W can sell some segments in Europe and the US but I'm honestly not sure how many of those they are even selling while DL/AF/KL/VS are gaining a competitive network in India which they've been lacking relative to UA/LH and AA/BA.


Well for 9W to make it 'more even', it needs to imitate what DL is doing. DL initially added flights from DL hubs to AMS. It now has added flights from other 'non-hub' large cities. 9W was rather busy building 'BOM' hub. It should have instead added AMS or CDG or LHR flights from likes of MAA/BLR/HYD/AMD and so forth to gain incremental traffic plus some local point to point traffic.

9W, after all is a bit player c.w. Delta. These days, it is even a bit player c.w. Indigo. One needs to be a little smarter as how to pick your battles.


UGH I think Indian aviation people are the only ones that don’t I understand why strong hubs are important. I think 9W should not focus on those other cities. Let Spice, Air Asia, Indigo have it. Focus on BOM and then DEL/BLR and make money. Offer the flights that business travelers want. The reason you don’t see Spice/Indigo rushing to launch MAA-HKG/LHR/etc is there is very little premium demand. Look I hope INdigo launches AMD, ATQ, NAA, HYD long haul flights. If they even launch long haul, it looks like BOM/DEL/BLR is where they will focus.

I agree that DL/KL/AF are getting a better deal than 9W. It just seems that DL have limited ways of helping Jet because they can’t give them cheap loans. WRT domestic flying, if flights are losing money cut them. Why fly P2P flights outside of their hubs and focus cities if they lose money? Makes no sense.
 
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unrave
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 4:49 am

Manisha Singhal reports in the Financial Express that Delta has expressed interest in acquiring both Goyal's 51% and Etihad's 24% stakes
https://www.financialexpress.com/indust ... 9/1366047/

I doubt if this is possible. Indian FDI regulations permit a maximum of 49% shareholding by foreign carriers. Given that Etihad already owns 24%, the maximum room left for acquisition in 25%. But there is catch - once 25% of a company is acquired the takeover code kicks in, which means the acquirer has to extend an open offer to other shareholders as well, contravening the FDI limit. What all this means is that Delta could at best acquire 24% of Jet and NG would continue to be the largest shareholder. Not happening.

Update: She has replied on twitter that the deal could be structured to meet the regulatory requirements.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
sibibom
Posts: 181
Joined: Fri Aug 12, 2016 7:04 am

Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 9:52 am

Technically foreign entities can own 100%, there is a lot of confusion with the new law, reason why Qatar hasn't started an airline in India yet.

https://www.financialexpress.com/econom ... n/1009190/
 
dtw2hyd
Posts: 6171
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 11:12 am

49% limit is on foreign air carrier ownership. Rest of the 51% can be owned by a foreign sovereign fund/private equity or anyone else other than an air carrier.

As always with the current Indian administration, they are not good at making sure the laws, executive orders they enact/issue comply with other laws/EOs. It is up to the legal system.

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