Saturday, August 15, 2020
Home Business Jet Airways Almost on The Brink of Shutdown, Facing Mounting Ground Problems

Jet Airways Almost on The Brink of Shutdown, Facing Mounting Ground Problems

The possible scenario which may send the scrip plunging, say analysts, is if the bidders do not match up to the expectations of lenders or they lose interest after the initial Expression of Interest or the whole process gets entangled or delayed in the law courts.

BY: RAVI DUTTA MISHRA

From a fleet of 119 until last year to only 7 as of on Monday, Jet, once India’s second-largest airline by market share, is almost on the brink of a shutdown. But the change in fortune for the airline has not dented investor confidence as the Jet counter continues to remain resilient.

Jet’s scrip is down just by a little over 6 per cent since January 1 even though the airline’s performance has nose-dived ever since it defaulted on its loan commitment in December.

For Jet, the developments are unlike how things panned out for an airline like Kingfisher during its turbulent times that ultimately led to its closure. Analysts say that this is largely owing to Jet’s 30 per cent market share on international routes.

plane

Prior to the grounding which has depleted around 90 per cent of Jet’s fleet size, the airline, with its large fleet, offered flights to 56 destinations in India and overseas. Pixabay

“The government is keen that they should keep this entity afloat by selling it to other airline partners. This is also important as Jet accounts for 30 per cent market share on international routes,” Sandeep Raina, Associate Director, Edelweiss Professional Investor Research, told IANS.

“In the case of other airlines facing stress, the government reacted differently largely because of their lower share on international routes,” he added.

Prior to the grounding which has depleted around 90 per cent of Jet’s fleet size, the airline, with its large fleet, offered flights to 56 destinations in India and overseas.

Besides its international share, Jet has some valuable assets, said Deepak Jasani of HDFC Securities.

“It owns 16 planes which are worth $400 million. The Jet Privilege programme, the international routes, and landing and parking slots in key cities make the airline an attractive option for potential buyers or can be easily monetised by its lenders (under IBC),” he added.

However, the airline on Monday said it has extended the cancellation of all its international flights until April 18, which might spell trouble for it on the stock exchanges.

plane
Jet’s scrip is down just by a little over 6 per cent since January 1 even though the airline’s performance has nose-dived ever since it defaulted on its loan commitment in December. Pixabay

Inflating debt is another major concern for investors. Jet owes over Rs 8,000 crore to a consortium of lenders led by the state-run State Bank of India (SBI).

Also Read: Common Myths Around Sleep Decoded!

The possible scenario which may send the scrip plunging, say analysts, is if the bidders do not match up to the expectations of lenders or they lose interest after the initial Expression of Interest or the whole process gets entangled or delayed in the law courts.

“If a non-strategic investor (including the National Infrastructure Investment Fund) wins the bid or the company needs to be nationalised or taken over by the government (through Air India or any other route)… in all such cases, its stock price could plunge,” said Jasani.(IANS)

STAY CONNECTED

18,955FansLike
362FollowersFollow
1,780FollowersFollow

Most Popular

Asymptomatic Covid-19 Patients Less Likely to Infect Close Contacts

New research has added to the growing body of evidence that asymptomatic patients suffering from Covid-19 are less likely to infect close contacts compared...

More Than Half of Indian Population Optimistic of Economic Recovery Soon

More than half the nation's population is optimistic that India will experience growth and economic recovery within two years, according to a Local Circles...

Plasma Therapy Treatment Safe, Effective for Covid Patients: Researchers

In an ongoing study of more than 300 Covid-19 patients treated with convalescent plasma therapy in the US, researchers suggest that the treatment is...

Changes in Weight Between Young Adulthood, Midlife Linked to Early Death Risk

Changes in weight between young adulthood and midlife may have important consequences for a person's risk of early death, say researchers. The study found that...

Researchers Develop AI Software That Assess 3D Printing Quality in Real Time

A team of US researchers has developed artificial intelligence (AI) software for 3D printers that assesses the quality of parts in real time, without...

Big B, Ramesh Sippy, Hema Recall Memories as ‘Sholay’ Turns 45

The blockbuster Sholay turned 45 on August 15. Amitabh Bachchan, Hema Malini and director Ramesh Sippy looked back to dissect how and why the...

A New Test can Diagnose Covid-19 in Just 20 Minutes

In an ongoing fight against the novel coronavirus, the researchers have developed a new test that can diagnose Covid-19 in just 20 minutes. The findings,...

We Have Learnt Some Tough Lessons in the Year 2020: President Kovind

"We have learnt some tough lessons in the year 2020," said President Ram Nath Kovind in his address to the nation on the eve...

Recent Comments