dtw2hyd
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 12:34 pm

Equity is never a problem in India. Working capital, to be clear regulations/limitations on working capital sources is the #1 issue, so many airlines failed.

If DL is serious, my suggestion to them is to work a deal with Indian government (Officially with the Central Bank (RBI) but actually it will be with Prime Ministers Office) which will allow say $500 Million/year for next five years from global sources (Indian term, External Commercial Borrowing). AI has an exemption up to $1 Billion, but that is not enough. Just make sure you present the entire deal is to benefit the State of Gujarat, it will sail through.

Without a clear and unhindered working capital source at competitive rates, it will be a failure. One cannot run a 4% at best margin business by borrowing at 15%.
 
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unrave
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 1:41 pm

dtw2hyd wrote:
One cannot run a 4% at best margin business by borrowing at 15%.

This statement that you have repeated many, many times - is baseless.
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

Tue Oct 30, 2018 1:42 pm

CaliguyNYC wrote:

UGH I think Indian aviation people are the only ones that don’t I understand why strong hubs are important.

Snip

Why fly P2P flights outside of their hubs and focus cities if they lose money? Makes no sense.

I never understand the Indian adversion to mega hubs. I think it is because every proposed hub isn't in the home city of too many (crab potting).

To seed new routes requires good low cost connections. But 30% fuel taxes are a handicap. I hope HYD's low fuel taxes allow the formation of a mega hub.

DXB thrived due to the lack of a major regional international to international hub. I do not get why Indian airlines do not focus on connections (requires GoI policy changes such as more runways and gates to fly people when they want to fly).

Lightsaber
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CaliguyNYC
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 1:47 pm

How can Delta buy more than 49% as a foreigner? Would they buy them out and then do a public stock offering selling to the Indian public - thus controlling 9W but having "Indians" own 51%? While I am a Delta guy and would LOVE Delta to buy them, I also feel that Tatas would be a great buyer as well. The advantage Delta has wrt working capital is that it can essentially "give" 9W the EU to US part of a India-US ticket for $1. Allowing 9W to retain all of the India-US fare to the India-EU flight. When 9W does well, they then increase the EU-US fare to "get back" the money.

And dtw2hyd - I don't think Delta needs to do anything for Gujarat (and I get it is a sarcastic comment based on your own personal bias). With the rupee decline, oil prices up, stocks crashing (in many places around the world), I think Modi has every LEGITIMATE interest in ensuring 9W doesn't go down. If he doesn't care or passes up legitimate solutions looking for vanity or bribes, then god help him and Jet. To be honest, having Delta invest in 9W would probably be good for India-US relations. The more the US has invested in India, the better for India. Look at how investments have "mostly" kept the Gulf states close to India.
 
hohd
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 1:48 pm

vadodara wrote:
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.

.


Jet failed to capitalize even from BOM where they have a good position and still have. They could have introduced flights from BOM to secondary cities in South and East India (Patna, Madurai, Vijayawada, Gauhathi, Ranchi etc), but they waited until Indigo or SpiceJet started flying there. Plus they should have added more flights to existing routes to prevent any further market share loss. They should have dominated the Gulf routes, where BOM is the No. 1 city for traffic to Gulf Middle East, but even that is slowly reducing.

As some one else commented earlier, now in India as long as Indigo flies, no one can make much money in the domestic sector.
 
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unrave
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 1:53 pm

CaliguyNYC wrote:
How can Delta buy more than 49% as a foreigner?

They can't. They will have to make an offer as part of a consortium and ensure that ultimately Delta do not own more than 49% of Jet. Who will Delta work with?
India: World's fastest growing major economy. World's fastest growing aviation market.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 1:56 pm

There are only two ways to run a 4%(General consensus) margin business borrowing at 15% (Indian PSB rate on working capital). 11% is the difference.

Accumulate 11% compounded losses (or) have a source who is ready to take 11% cut as laundry surcharge on their investments.

India has two airlines in the first category namely AI and 9W.
 
VTORD
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 1:59 pm

unrave wrote:
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.


For some reason I thought that number was 26% not 25. I believe I read that during the Etihad-Jet FDI saga. But doesn't matter 51+24 is still more than 26 anyways!!
She also mentions in the article that Tatas may pick up NG's 51% so may be that is what she means by "could be structured to meet the regulatory requirements": DL pick up EY's 24% and Tata holds 51% (NG's)?

Do you think Manisha Singhal is a good aviation journalist? I know A.net is split over the bloggers "doing hatchet jobs" and desi journos have stellar reputation on this forum but haven't really followed her that much so just curious.
Twitter: @spottingfoodie
 
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unrave
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 2:01 pm

dtw2hyd wrote:
There are only two ways to run a 4%(General consensus) margin business borrowing at 15% (Indian PSB rate on working capital). 11% is the difference.

Accumulate 11% compounded losses (or) have a source who is ready to take 11% cut as laundry surcharge on their investments.

India has two airlines in the first category namely AI and 9W.

This entire comment is again baseless. The difference between the operating margin and cost of working capital has no bearing on the profitability.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
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unrave
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 2:10 pm

VTORD wrote:
Do you think Manisha Singhal is a good aviation journalist? I know A.net is split over the bloggers "doing hatchet jobs" and desi journos have stellar reputation on this forum but haven't really followed her that much so just curious.


Yeah she's alright. One of the better ones covering Indian aviation. The problem with most Indian journalists is that they do not understand numbers at all. They just cannot report beyond headline numbers when they discuss financials.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
klakzky123
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 2:32 pm

CaliguyNYC wrote:
vadodara wrote:
klakzky123 wrote:

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.


Exactly, LCCs destroyed the ability of other carriers to grow hubs outside of DEL and BOM. No one can get a critical mass of connecting traffic to drive a hub in India. So everything is largely dependent on O&D. There are just too many ways to get to Europe from virtually every major city thanks to the ME3, LH and BA. So 9W should only be flying from cities where it can profitably run a flight on O&D and 9W has large planes so they really have to pay attention to yields. This isn't like DL launching 767s to Europe. 9W only has 777Ws and A332/A333s for Europe.

Now the DL/AF/KL/VS relationship has given 9W new passengers that result in acceptable yields so they're filling these huge planes with passengers that aren't trashing yields. But there are limits. I think if 9W ever gets their 789s, then they'll be in a much stronger position for Europe. But having to rely on the 77W really restricts where they can profitably fly.

In an ideal scenario, 9W locks up a JV with DL/AF/KL/VS and manages to secure an interline agreement with an LCC which will enable it to give up on some of the lousy domestic traffic that is dragging them down. No codeshare is required. India still operates largely on travel agencies so a reasonable interline agreement is all that they'd need. They're losing too much trying to create connectivity so they just need to find a way to outsource it to one of the LCCs.
 
MIflyer12
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 2:51 pm

unrave wrote:
dtw2hyd wrote:
There are only two ways to run a 4%(General consensus) margin business borrowing at 15% (Indian PSB rate on working capital). 11% is the difference.

Accumulate 11% compounded losses (or) have a source who is ready to take 11% cut as laundry surcharge on their investments.

India has two airlines in the first category namely AI and 9W.

This entire comment is again baseless. The difference between the operating margin and cost of working capital has no bearing on the profitability.


Businesses, long term, need to earn their cost of capital. Exceptions are with a pool of investors with unlimited enthusiasm (say, Tesla), or firms that get subsidy after subsidy - wasting somebody else's money.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 2:57 pm

As long as AF's don't work hard, don't let KLM work hard and DL union's no JVs with low-cost labor airlines policies are in place, Delta management's hands are tied, they cannot have a JV with 9W.

Not easy to kick AF out or rewrite Delta union contracts. CDG is a high yield O&D hub and DL employee productivity is very good. Why would management ruffle feathers by trying to form a JV with 9W?

Delta who has the best revenue and network management skills in the world is virtually running 9W, still not able to come out the hole. It is not a management issue, problem is somewhere else.
 
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unrave
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 3:09 pm

MIflyer12 wrote:
unrave wrote:
dtw2hyd wrote:
There are only two ways to run a 4%(General consensus) margin business borrowing at 15% (Indian PSB rate on working capital). 11% is the difference.

Accumulate 11% compounded losses (or) have a source who is ready to take 11% cut as laundry surcharge on their investments.

India has two airlines in the first category namely AI and 9W.

This entire comment is again baseless. The difference between the operating margin and cost of working capital has no bearing on the profitability.


Businesses, long term, need to earn their cost of capital. Exceptions are with a pool of investors with unlimited enthusiasm (say, Tesla), or firms that get subsidy after subsidy - wasting somebody else's money.


Operating margin has no bearing on the cost of WC. You can very profitably run a 1% operating margin business borrowing WC at 20%.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
klakzky123
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 3:15 pm

dtw2hyd wrote:
As long as AF's don't work hard, don't let KLM work hard and DL union's no JVs with low-cost labor airlines policies are in place, Delta management's hands are tied, they cannot have a JV with 9W.

Not easy to kick AF out or rewrite Delta union contracts. CDG is a high yield O&D hub and DL employee productivity is very good. Why would management ruffle feathers by trying to form a JV with 9W?

Delta who has the best revenue and network management skills in the world is virtually running 9W, still not able to come out the hole. It is not a management issue, problem is somewhere else.


I'm aware of the contract issues. The odds of a JV are extremely low but that is ultimately what 9W needs. They desperately need the cost and revenue sharing component to even out this whole experiment. 9W is owning all of the risk in an already hyper competitive market and need the financial stability of cost sharing on these flights.

But the European flights probably work without a JV. I'm guessing the interline agreement between the four airlines and 9W still gives 9W reasonable prorated yields which is far better than filling those planes with low yielding local traffic. The bigger lead balloon is their hyper unprofitable domestic operations. And I don't know how they're going to fix that.
 
Antarius
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 4:12 pm

lightsaber wrote:
CaliguyNYC wrote:

UGH I think Indian aviation people are the only ones that don’t I understand why strong hubs are important.

Snip

Why fly P2P flights outside of their hubs and focus cities if they lose money? Makes no sense.

I never understand the Indian adversion to mega hubs. I think it is because every proposed hub isn't in the home city of too many (crab potting).

To seed new routes requires good low cost connections. But 30% fuel taxes are a handicap. I hope HYD's low fuel taxes allow the formation of a mega hub.

DXB thrived due to the lack of a major regional international to international hub. I do not get why Indian airlines do not focus on connections (requires GoI policy changes such as more runways and gates to fly people when they want to fly).

Lightsaber


Mega hubs work when the hub is convieniently located in a major population center AND infrastrcture supports this hub. If I am going from SFO to MAA, for example I could go through DXB, HKG, SIN, FRA etc.. all of which are a vastly superior experience compared to taking AI and connecting in DEL.

A mega hub doesn't just happen.. it takes planning and investment from more parties than just an airline. DEL and BOM are not megahub quality airports (although the terminals are much nicer now than they were a decade + ago)
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
 
YouGeeElWhy
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 4:34 pm

Antarius wrote:
A mega hub doesn't just happen.. it takes planning and investment from more parties than just an airline. DEL and BOM are not megahub quality airports (although the terminals are much nicer now than they were a decade + ago)
It also takes the right policies to nurture, which India does not have. DEL should have been DXB. India did this to themselves.

India will have very large airports due to domestic demand, but they will not connect the world just like China. That and the lack of a sophisticated railway system guarantees that P2P flying will rule India.
 
CaliguyNYC
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 5:15 pm

YouGeeElWhy wrote:
Antarius wrote:
A mega hub doesn't just happen.. it takes planning and investment from more parties than just an airline. DEL and BOM are not megahub quality airports (although the terminals are much nicer now than they were a decade + ago)
It also takes the right policies to nurture, which India does not have. DEL should have been DXB. India did this to themselves.

India will have very large airports due to domestic demand, but they will not connect the world just like China. That and the lack of a sophisticated railway system guarantees that P2P flying will rule India.


Indian doesn't need to connect the world just like China doesn't. India's hub will be based on connecting domestic traffic to global cities with some international to international. That is what China has accomplished and look at the city pairs they are connecting (take EU-China). Pretty amazing. Int to Int will come with JVs/alliances/relationships. If AF/KL/VS/DL ever get a real JV or investment into Jet, I can totally see them pushing traffic through BOM on to SYD/MEL. BOM already is close to supporting flights to OZ. Add some premium feed coming in through AF etc and those flights would be great for everyone. I hope the DL deal with 9W works out. Indian airlines won't be able to do it not he own like Chinese airlines did. China's govt protected and helped their airlines the govt of India works against their airlines
 
raylee67
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 5:22 pm

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


Indigo ? Vistara ?

Vistara is losing money. But don't forget it has deep pockets to back it up. Tata Group is in a completely different league than the owners of the other Indian airlines. It would have the cash flow to indefinitely sustain Vistara, as long as it is willing to.
319/20/21 332/33 342/43/45 388 707 717 732/36/3G/38/39 74R/42/43/44/4E/48 757 762/63 772/7L/73/7W 788 D10 M80 135/40/45 175/90 DH1/4 CRJ/R7 L10
AY LH OU SR BA FI
AA DL UA NW AC CP WS FL NK
CI NH SQ KA CX JL BR OZ TG KE CA CZ NZ JQ RS
 
mayank28
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 5:54 pm

unrave wrote:
MIflyer12 wrote:
unrave wrote:
This entire comment is again baseless. The difference between the operating margin and cost of working capital has no bearing on the profitability.


Businesses, long term, need to earn their cost of capital. Exceptions are with a pool of investors with unlimited enthusiasm (say, Tesla), or firms that get subsidy after subsidy - wasting somebody else's money.


Operating margin has no bearing on the cost of WC. You can very profitably run a 1% operating margin business borrowing WC at 20%.

Quite right. Profitably should depend on how fast you can rotate that working capital.
 
YouGeeElWhy
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 8:06 pm

CaliguyNYC wrote:
YouGeeElWhy wrote:
Antarius wrote:
A mega hub doesn't just happen.. it takes planning and investment from more parties than just an airline. DEL and BOM are not megahub quality airports (although the terminals are much nicer now than they were a decade + ago)
It also takes the right policies to nurture, which India does not have. DEL should have been DXB. India did this to themselves.

India will have very large airports due to domestic demand, but they will not connect the world just like China. That and the lack of a sophisticated railway system guarantees that P2P flying will rule India.


Indian doesn't need to connect the world just like China doesn't. India's hub will be based on connecting domestic traffic to global cities with some international to international. That is what China has accomplished and look at the city pairs they are connecting (take EU-China). Pretty amazing. Int to Int will come with JVs/alliances/relationships. If AF/KL/VS/DL ever get a real JV or investment into Jet, I can totally see them pushing traffic through BOM on to SYD/MEL. BOM already is close to supporting flights to OZ. Add some premium feed coming in through AF etc and those flights would be great for everyone. I hope the DL deal with 9W works out. Indian airlines won't be able to do it not he own like Chinese airlines did. China's govt protected and helped their airlines the govt of India works against their airlines
India could have connected the world was my supposition. They had the supreme geography advantage. Best India can do on the International scene now is try to replicate the long haul LCCs in other Asia countries. Hopefully, 9E will get that chance someday to scale up to flying bigger planes. The premium INTL-INTL connection market has sailed and passed India.

The idea of a JV between any EU3 and any Indian airline is laughable. The kangaroo route JVs that exists or other ones to SE Asia is between tier 1 airliners like LH-SQ or QF-EK or BA-QR. Best 9W can hope for is joining Skyteam.

It is also laughable the idea of DL making a big investment in 9W. If they do I will short DAL that very day.
 
vadodara
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 9:27 pm

India could have been a hub from Europe to SE Asia/Australia. However that would require vision and policy not no mention customer service. And infrastructure.

Which of the 4 do you think are available in Bombay?
 
jbs2886
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 9:38 pm

unrave wrote:
CaliguyNYC wrote:
How can Delta buy more than 49% as a foreigner?

They can't. They will have to make an offer as part of a consortium and ensure that ultimately Delta do not own more than 49% of Jet. Who will Delta work with?


I wonder if DL's pension trust would qualify as "not an airline" - for example, DL's pension trust purchased part of Aeromexico and that percentage is included in the holdings DL has of AM.

https://airwaysmag.com/industry/analysi ... co-market/
 
Antarius
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Re: Jet Airways: reports cash running out

Tue Oct 30, 2018 9:47 pm

CaliguyNYC wrote:
YouGeeElWhy wrote:
Antarius wrote:
A mega hub doesn't just happen.. it takes planning and investment from more parties than just an airline. DEL and BOM are not megahub quality airports (although the terminals are much nicer now than they were a decade + ago)
It also takes the right policies to nurture, which India does not have. DEL should have been DXB. India did this to themselves.

India will have very large airports due to domestic demand, but they will not connect the world just like China. That and the lack of a sophisticated railway system guarantees that P2P flying will rule India.


Indian doesn't need to connect the world just like China doesn't. India's hub will be based on connecting domestic traffic to global cities with some international to international. That is what China has accomplished and look at the city pairs they are connecting (take EU-China). Pretty amazing. Int to Int will come with JVs/alliances/relationships. If AF/KL/VS/DL ever get a real JV or investment into Jet, I can totally see them pushing traffic through BOM on to SYD/MEL. BOM already is close to supporting flights to OZ. Add some premium feed coming in through AF etc and those flights would be great for everyone. I hope the DL deal with 9W works out. Indian airlines won't be able to do it not he own like Chinese airlines did. China's govt protected and helped their airlines the govt of India works against their airlines


The problem is, with DXB and DOH so close by, India struggles to connect itself with the world on local airlines. Leave alone India being a global connecting hub.

Why would I connect in DEL when I can go through DOH for example? SFO-DXB-BLR is a far better choice than SFO-DEL-BLR, and that's purely on the infrastructure side, not even talking about the hard and soft product of the airline. Similarly, I can go via HKG and relax at the Wing or I can sit in the dingy Maharaja lounge in DEL t3 - national pride aside, why would anyone choose the latter?

As a result, the airlines doing P2P routes domestically are making money, while the ones trying to semi-mega hub out of DEL and BOM arent.
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
 
vadodara
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 2:03 am

Things might actually get worse for the airlines.

The railways have decided to become innovative; Train 18 may be able to shave about 30-40% of travel time for Shatabdis. That means for train journeys up to 3 hrs will take away business away.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 2:11 am

vadodara wrote:
Things might actually get worse for the airlines.

The railways have decided to become innovative; Train 18 may be able to shave about 30-40% of travel time for Shatabdis. That means for train journeys up to 3 hrs will take away business away.

Rolling stock alone will not do much to improve travel times. Railway modernisation is much more complicated than that and I don't see the babus of Indian Railways doing anything meaningful on that front.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
Antarius
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 3:24 am

unrave wrote:
vadodara wrote:
Things might actually get worse for the airlines.

The railways have decided to become innovative; Train 18 may be able to shave about 30-40% of travel time for Shatabdis. That means for train journeys up to 3 hrs will take away business away.

Rolling stock alone will not do much to improve travel times. Railway modernisation is much more complicated than that and I don't see the babus of Indian Railways doing anything meaningful on that front.


Not necessarily on longer distances, but on shorter routes, it would certainly change the equation. BLR to MAA, for example, I take the day train. Between driving to what feels like another country to get to BLR (makes the NRT transport situation seem minor) and the flight, I'd rather take a train where I can work and get fed.

Shave off 30% of the time and it's even more of a no brainer.
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
 
lutfi
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 4:07 am

dtw2hyd wrote:
Equity is never a problem in India. Working capital, to be clear regulations/limitations on working capital sources is the #1 issue, so many airlines failed.

If DL is serious, my suggestion to them is to work a deal with Indian government (Officially with the Central Bank (RBI) but actually it will be with Prime Ministers Office) which will allow say $500 Million/year for next five years from global sources (Indian term, External Commercial Borrowing). AI has an exemption up to $1 Billion, but that is not enough. Just make sure you present the entire deal is to benefit the State of Gujarat, it will sail through.

Without a clear and unhindered working capital source at competitive rates, it will be a failure. One cannot run a 4% at best margin business by borrowing at 15%.


Corporate finance 101 - working capital, as it is capital required to run the business, is best funded by equity, or at least long term debt (>10 years) not short term debt. You don't want to be reliant on a bank deciding if to extend a line of credit or not to be able to buy fuel.

Debt is best used for asset based funding. I.e. a 12 year lease on an aircraft. The bank can't pull the funding for 12 years - no risk to the business unless you can't pay the leases

If Indian airlines are reliant on 3rd party funding for working capital, well, no wonder they are in trouble.

When comparing cost of finance, you should be looking at return on invested capital not operating margin. Many airlines worldwide are making ROIC > 15%

I note that 3 senior VPs have left 9W last week - CIO, head of revenue management and head of cargo
 
BrooklyBOMgal
Posts: 39
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 4:52 am

Everything is so similar to the Kingfisher story.....routes being cut, staff being reduced, lease defaults and talks of a big business house looking to invest and save the airline.....https://www.businesstoday.in/markets/co ... 23922.html
 
fiestyemus
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 5:50 am

vadodara wrote:
Things might actually get worse for the airlines.

The railways have decided to become innovative; Train 18 may be able to shave about 30-40% of travel time for Shatabdis. That means for train journeys up to 3 hrs will take away business away.


30-40% ! I would like to see any source for that and wager that this is patently untrue. At best (from the figures I have seen) Train 18 results in about a 15% time saving, and that is with the right infrastructure. Highly unlikely that Train 18 affects Indian airlines. Infrastructure upgrades on the network could cause some pain to airlines, but given the Indian bureaucracy that is highly unlikely.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 6:43 am

GVK lounge at Mumbai airport stops accepting passengers flying on Jet Airways
https://livefromalounge.boardingarea.co ... mumbai-t2/

Translation: Jet Airways has not cleared its dues to the lounge operator.
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

Wed Oct 31, 2018 8:05 am

unrave wrote:
GVK lounge at Mumbai airport stops accepting passengers flying on Jet Airways


eeks! Seems the troubles are spreading everywhere. Any idea on their schedules being affected or grounded planes?

Hope their owner is working something out. :(
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 9:25 am

avier wrote:

Hope their owner is working something out. :(

This train is hurtling down the path of no return.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 10:20 am

lutfi wrote:
Corporate finance 101 - working capital, as it is capital required to run the business, is best funded by equity, or at least long term debt (>10 years) not short term debt. You don't want to be reliant on a bank deciding if to extend a line of credit or not to be able to buy fuel.

Debt is best used for asset based funding. I.e. a 12 year lease on an aircraft. The bank can't pull the funding for 12 years - no risk to the business unless you can't pay the leases

If Indian airlines are reliant on 3rd party funding for working capital, well, no wonder they are in trouble.

When comparing cost of finance, you should be looking at return on invested capital not operating margin. Many airlines worldwide are making ROIC > 15%

I note that 3 senior VPs have left 9W last week - CIO, head of revenue management and head of cargo


No commercial airline can raise equity to cover working capital. Globe is loaded with cheap finance source.
There are only a handful of airlines with above 15% margin. Delta is one of those.

If it is a 15%+ business Warren Buffet would buy all airlines, and Richard Branson wouldn't get out of the business.

BTW, the so-called well run airlines in India follow Corporate Finance 420 teachings.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 10:30 am

dtw2hyd wrote:
No commercial airline can raise equity to cover working capital.

Sigh. One more baseless statement. Btw look up ROIC.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 11:06 am

Jet Airways gets payment delay notice from aircraft lessors
https://economictimes.indiatimes.com/in ... 445818.cms
India: World's fastest growing major economy. World's fastest growing aviation market.
 
vadodara
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 11:59 am

fiestyemus wrote:
vadodara wrote:
Things might actually get worse for the airlines.

The railways have decided to become innovative; Train 18 may be able to shave about 30-40% of travel time for Shatabdis. That means for train journeys up to 3 hrs will take away business away.


30-40% ! I would like to see any source for that and wager that this is patently untrue. At best (from the figures I have seen) Train 18 results in about a 15% time saving, and that is with the right infrastructure. Highly unlikely that Train 18 affects Indian airlines. Infrastructure upgrades on the network could cause some pain to airlines, but given the Indian bureaucracy that is highly unlikely.


Fair, let's wait for the data to come in. I was going by notional increase in speed (100 kmh -> 160 kmh) and improvement in acceleration/deceleration.

This is again a notional example; there are additional 'threats'. Specifically the land acquisition piece in MH between Bombay and Surat seems to have been resolved. Assuming the highway does get completed, the drive time will be sufficiently attractive that there will be a shift away from air.

Again, Indian Railways is not above to become Deutschbahn any day and anyone who challenges that notion (e.g. Modi with his Bullet train idea) will attract barbs. So net-net, things will stumble along. It does not hurt to put a notional advantage as part of discussion though.
 
dtw2hyd
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 12:06 pm

Naresh Goyal once was a kingpin of Indian aviation. One phone call to MoCA/DGCA, AI has to drop a route it developed and give it to 0W. One call to AI unions the day before peak season start, AI unions used to go on strike. Now the world is treating him like a granny on life support, who and when should someone pull the plug.

Raising a healthy kid to live a full life is always a better option.than having more kids to mitigate infant mortality, Doling out AOCs is not a fix to failing financial system and heavy tax regime.

Bhatia may be thinking he is ruling Indian aviation, will be in the same position as Goyal in a few years if the fundamental structure is not fixed.
 
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unrave
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 12:22 pm

Indian financial system is far from failing, though residents of Amreeka may not know what ground reality in India is.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
Jetty
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 4:08 pm

Even as the Tata group is believed to have intensified negotiations for a possible purchase of a stake in troubled airline Jet Airways, the carrier may find a white knight in Delta Air Lines, three people familiar with the development told FE.

https://www.financialexpress.com/indust ... 9/1366047/
 
VTORD
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Re: Jet Airways: reports cash running out

Wed Oct 31, 2018 6:24 pm

vadodara wrote:
fiestyemus wrote:
vadodara wrote:
Things might actually get worse for the airlines.

The railways have decided to become innovative; Train 18 may be able to shave about 30-40% of travel time for Shatabdis. That means for train journeys up to 3 hrs will take away business away.


30-40% ! I would like to see any source for that and wager that this is patently untrue. At best (from the figures I have seen) Train 18 results in about a 15% time saving, and that is with the right infrastructure. Highly unlikely that Train 18 affects Indian airlines. Infrastructure upgrades on the network could cause some pain to airlines, but given the Indian bureaucracy that is highly unlikely.


Fair, let's wait for the data to come in. I was going by notional increase in speed (100 kmh -> 160 kmh) and improvement in acceleration/deceleration.

@vadodara

By his own admission Lohani is on record here at 15% "provided the infrastructure improves" being the caveat. Plus I think you are assuming a lower current speed for the Shatabdi.

https://www.livemint.com/Politics/bNQZ9 ... -pics.html

As you said notionally, what would be interesting is Train 20, especially if you are traveling to the intermediate stops. I don't know if the stupid station-based quota system still exists or not but take that away and a 15% cut in Rajdhani times is Game On.
Twitter: @spottingfoodie
 
vadodara
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Re: Jet Airways: reports cash running out

Thu Nov 01, 2018 12:02 pm

I brought up Train 18 as a specific threat to short-haul flights. Yes, Train is even a bigger threat when one considers the demand from intermediate stops.

If one looks at the Delhi-Bhopal route, be it Train 18 or 20, at 3-4 hrs journey time it will take away market share.
 
vadodara
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Re: Jet Airways: reports cash running out

Thu Nov 01, 2018 12:08 pm

<ago

Naresh Goyal once was a kingpin of Indian aviation. One phone call to MoCA/DGCA, AI has to drop a route it developed and give it to 0W. One call to AI unions the day before peak season start, AI unions used to go on strike.>

I thought both AI and 9W are in the dump because they were ‘forced’ to serve STV.

Oops, my bad. 9W does not even serve STV.
 
sibibom
Posts: 188
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Re: Jet Airways: reports cash running out

Thu Nov 01, 2018 12:49 pm

vadodara wrote:
I brought up Train 18 as a specific threat to short-haul flights. Yes, Train is even a bigger threat when one considers the demand from intermediate stops.

If one looks at the Delhi-Bhopal route, be it Train 18 or 20, at 3-4 hrs journey time it will take away market share.


3-4 hours? Train 18 ain't some magically beast (or a bullet train). Currently, Delhi-Bhopal line takes 8.5 hours, with train 18 there will be an improvement of maximum 15% so we are looking at 7.5 hours
 
AI
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Re: Jet Airways: reports cash running out

Thu Nov 01, 2018 12:52 pm

Apologies for my ignorance, what is Train 18?
 
DSFTEBMNZ
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Re: Jet Airways: reports cash running out

Thu Nov 01, 2018 12:54 pm

AI wrote:
Apologies for my ignorance, what is Train 18?


YouTube has videos showing the unveiling at the ICF Rail Factory.

https://youtu.be/SVpOKwCT83Y
 
hohd
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Re: Jet Airways: reports cash running out

Thu Nov 01, 2018 1:30 pm

I would rather still fly than take trains in India even on short haul. The level of cleanliness is still not there on the trains and trains are delayed too. Look at BLR-MAA (and BLR-HYD) traffic after initially dipping down, it is now increasing at a rapid pace. Jet is becoming like Kingfisher, hope it does not end up like them. It urgently needs a restructuring.
 
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lightsaber
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Re: Jet Airways: reports cash running out

Thu Nov 01, 2018 2:43 pm

Jet has hired a Revenue consultant and a cost cutting consultant:
https://www.moneycontrol.com/news/busin ... 1.html/amp
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

Fri Nov 02, 2018 1:35 am

AI wrote:
Apologies for my ignorance, what is Train 18?

Train 18 is India's first indigenously built trainset. It is hoped that this would be the first step towards modernising India's antiquated rail infrastructure. Train 18 is named after the year 2018. An updated version, Train 20 is expected to be rolled out in 2020.
India: World's fastest growing major economy. World's fastest growing aviation market.
 
vadodara
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Re: Jet Airways: reports cash running out

Fri Nov 02, 2018 1:46 am

More importantly Train18 is where someone in railways has attempted to innovate something

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