Friday, March 5, 2021
Home Opinions Can Jet Airways be revived soon?

Can Jet Airways be revived soon?

Also Read

Jet Airways (Jet) has been restructured. Naresh Goyal, the founder chairman has resigned. He and his wife have stepped down from the board. Lenders to the beleaguered carrier will now take over the management and board until it finds a new strategic investor. Meanwhile, lenders will provide a further Rs. 1500 crores as loan to stabilize its operations as an ongoing concern.

The move has multiple goals—saving ‘Brand India’ from the taint of a bankruptcy, saving serious inconveniences for passengers, and avoiding the impact of a business collapse on the economy. The other significant goal is that what has happened in the case of Infrastructure Leasing and Financial Services Ltd (IL&FS) does not play out in the case of Jet.

The problem with Jet, as Rajnish Kumar, Chairman, SBI pointed out in an interview to The Economic Times, is that an airline essentially has very few assets that can be sold easily. The only assets are the brand name, a few planes that may be owned (but which may have loans pending against them), some landing slots at airports, and a frequent flyer program whose value may depreciate if the airline does not regain its market share fast. Therefore, whoever takes over Jet will not take over the entire debt. This means banks will take a steep haircut, maybe even as high as 50 per cent.

There are only three categories of buyers for Jet – a foreign airline that wants to control domestic routes to feed international traffic, and is willing to do this with a 49 per cent stake (max. permissible under the current regulations); a domestic business house that is willing to invest in Jet and make it viable through high equity infusions, and an existing domestic airline that is willing to undertake a difficult merger.

Jet plans to restart about 50 flights by end of this month and add 40 grounded planes by end of April. It is currently operating 35 aircraft and may take this number to 75 by April-end, if it is able to persuade the lessors to allow them to fly the planes again. This would be about 75% of their capacity, since Jet had a fleet of 119 aircraft before lessors started taking back the aircraft but government officials say that 103 of them were operational.

Its senior officials, including CEO Vinay Dube and CFO Amit Agarwal, attended the meeting called by the aviation secretary on Tuesday and shared plans on reviving operations. There are about 15 heads, where the airline has dues and they have to decide on the payment according to priority. However, Airport Authority has no dues against Jet Airways, as they are flying less.

The central government and the lenders hope that with adequate funding and 75% capacity utilization, if achieved by April end, Jet would regain lost value and attract good price minimizing the haircut.

The writer is a longstanding commentator on contemporary issues.

  Support Us  

OpIndia is not rich like the mainstream media. Even a small contribution by you will help us keep running. Consider making a voluntary payment.

Trending now

Latest News

Recently Popular

India’s Stockholm syndrome

The first leaders of independent India committed greater injustice in 60 years than the British or the Islamists in all of history by audaciously ignoring the power to reset the course to the future of the country; the cowards succumbed to selfishness and what I can only ascribe to the Stockholm Syndrome.

गुप्त काल को स्वर्ण युग क्यों कहा जाता है

एक सफल शासन की नींव समुद्रगप्त ने अपने शासनकाल में ही रख दी थी इसीलिए गुप्त सम्राटों का शासन अत्यधिक सफल रहा। साम्राज्य की दृढ़ता शांति और नागरिकों की उन्नति इसके प्रमाण थे।

Electronic media, social media, and manipulation: An analysis

Here is how both the media and social media are manipulating people in a direct or indirect manner and the same could be prevented by people if they pay heed to their surroundings and act accordingly.

सामाजिक भेदभाव: कारण और निवारण

भारत में व्याप्त सामाजिक असामानता केवल एक वर्ग विशेष के साथ जिसे कि दलित कहा जाता है के साथ ही व्यापक रूप से प्रभावी है परंतु आर्थिक असमानता को केवल दलितों में ही व्याप्त नहीं माना जा सकता।

पोषण अभियान: सही पोषण – देश रोशन

भारत सरकार द्वारा कुपोषण को दूर करने के लिए जीवनचक्र एप्रोच अपनाकर चरणबद्ध ढंग से पोषण अभियान चलाया जा रहा है, भारत सरकार द्वारा...