Jet Airways Unable to Run Itself
The Naresh Goyal-controlled airline Jet Airways has not been regular in paying salaries to its staff, its pilots, engineers and senior management for quite some time now. A number of pink slips have earlier already been given, while the flight crew have warned the management several times of no-duty unless salary issues are sorted out. (See : Jet Airways workforce reduction)
A good number of pilots in the recent past have already quit Jet Airways. The remaining staff have to work overtime to make up for the manpower shortage. In such a scenario, for a company facing such a severe cash crunch, to hire a new staff or a new pilot is completely ruled out.
Today, the situation finally saw its logical end.
The airline failed to operate as many as domestic 10 flights from Chhatrapati Shivaji Maharaj International Airport (CSMIA) Mumbai on November 18 as it did not have the required number of pilots. Flights were cancelled. It was inevitable. It was waiting to happen one day. (See: Collapse)
Hundreds of passengers of Jet Airways were left in the lurch at Mumbai. The transit passengers were the worst hit.
The airline had to clarify in a statement, “Jet Airways had to cancel a few domestic flights of date (November 18) due to operational reasons. Guests of the affected flights were duly informed about their flight status via SMS alerts. In accordance with regulatory policy, guests have been re-accommodated and or compensated.”
The airline kept regretting the inconvenience caused to its guests and coming up with clarifications like “operational issues”.
However, the aviation followers were quick to conclude that it was due to pilots’ scarcity at the Jet Airways. And there is no solution in sight that could bail Jet out of its crisis in near future. Even the Tata-Jet deal is difficult to implement. (See: Tata- Jet Deal)
Deeply immersed in debt, losses and liabilities, Jet Airways is unable to even pay its lessors the lease rentals. Unless it does something magical soon, the airplanes will be reclaimed by the lessors.
Is the Tata – Jet Deal Bad News for Indigo, Air India ?
It was Jet Airways founder Naresh Goyal who had tried to prevent the Tatas to venture into the airline business. It is well known in aviation circles that for the past 20 years or so, Jet Airways did not want any airline license for Tatas. Jet Airways had even tried to resist any relaxation in the erstwhile 5/20 norms to prevent Tata’s entry. All those events are history now. (See: 5/20 Lobby )
Today, the story is different.
Tables seem to have turned. Jet has pruned its network. A number of its planes are grounded and out of airline business. Deeply immersed in debt and losses, Jet is trying to sell its planes, it is cutting its work force and has been unable to pay staff salaries on time. Though Jet Airways has ordered a number of new Boeings, it is not in a position to take their deliveries. (See: Jet Airways)
Initially, Jet Airways was among the airlines who had protested & delayed the entry of foreign airlines. After some time it claimed all entitlements, sold partly its stake to foreign airlines (Etihad).
Today, Jet is strapped of cash. It has been in talks with both strategic and financial investors to sell its assets and a major chunk of its business. A situation has reached today where both Mr and Mrs Naresh Goyal are agreeing to relinquish their own shares on the buyer’s terms. Strange.
For Tatas, Jet Airways appeared to be a better option than buying Air India for the time being. The profits of Tata’s airline business have been severely affected by its inability to have flights across the country. Tatas want to give its aviation plans a much needed boost. They are keen on landing rights, routes, related infrastructure amenities, and the new Boeings of Jet. The Tata group is also keen on the exit of existing promoters and the Goyal family to have a complete control over Jet Airways. (See: Tata-Jet Deal)
Tata group chairman N Chandrasekaran has been doing a great job steering the well respected Tata group. He is keen that a deal is quickly worked out that will strengthen the group’s position in the aviation business and give it a much needed heft. The Jet deal is a meticulously calculated risk at a time when Tata group as a whole is doing exceeding well. Only Tatas can survive where Jet with more than two decades of experience failed. Anybody who buys jet now will immediately need to fund in billions to recover the airline plus more to make it functional.
The First Step
In the first formal step towards a possible acquisition of Jet Airways, Tata Sons will take up the proposal at its board meeting and focus on achieving the scale in Tatas’ aviation business through Jet purchase.
According to analysts and aviation followers, the Tata-Jet deal is an excellent news as a monopoly presently being enjoyed by Indigo is not good for the consumers. A strong and healthy Jet is therefore needed to counter this.
The deal between the Tata group and Jet Airways is slowly moving forward towards its conclusion.
Naresh Goyal is finally forced to leave a sinking ship and will be very happy to hand over the proverbial “tail of the tiger” to Tatas and quit. Subroto Roy of Sahara and Capt Gopinath of Air Deccan had already done so earlier. The Wheel of fortune keeps rotating. History repeats itself. After Jet, may be Air India, which was with the Tatas 65 years ago, could be the next for Tatas. That may be a different story.
Speculations on Jet Airways Takeover by Tata Sons Build Up
The board of Tata Sons is probably going to meet on Friday to discuss Jet Airways Takeover. This is about a proposition to assume control over the Naresh Goyal-controlled Jet Airways, which is searching for investors to hold over liquidity crunch that it has been saddled with. (See :Jet Airways Crisis)
In the mean time, Jet Airways shares hit a four-month high; takes off 105% from October low. The stock revived 30% to Rs 335 on BSE in the intra-day exchange, its most keen single day gain on reports of Tata Group is in talks with purchase a controlling stake in the destitute airline company.
Jet Airways had earlier said that the board of directors of the company had considered various cost-cutting measures, debt reduction and funding options, including infusion of capital, monetization of assets and sale of company’s stake in its Loyalty program. These measures also include carrying out a sale and subsequent leaseback of its finance leased aircraft.
Airline’s deputy chief executive and CFO Amit Agarwal not long ago had conceded that the organization was in talks with “different invested individuals” for fund infusion and also offering six of its Boeing 777 planes and a stake in its loyalty progarmme Jet Privilege.
While a representative of Tata Sons, which as of now runs two airlines – the full-service carrier Vistara in a JV with Singapore Airlines, and the low-cost carrier AirAsia India in JV with Air Asia of Malaysia, declined to remark on “hypothesis,” Jet did not react to PTI questions on the equivalent.
“We don’t remark on speculation,” a Tata Sons, which initially possessed the present national bearer Air India, representative said when requested affirmation.
Other than Goyal, who alongside his family claims 51 percent stake in the transporter, Gulf carrier Etihad Airways holds 24 percent stake in the destitute carrier which not long ago revealed Rs 12.61 billion misfortune for the September quarter against a benefit of Rs 710 million y-o-y, making it the third straight quarter of substantial misfortunes.
This had the airline also putting as many as six of its Boeing 777s on sale to part-fund liquidity.
Media reports propose that the parent organization of Vistara, Tata-Singapore Airlines, is seeing all-stock merger with Jet Airways as a feature of the Tata group’s intends to board Goyal’s jet Airways.
In an exchange filing, Jet Airways portrayed the media reports as theoretical.
Travel Industry sees red as Jet Airways withdraws service
Seven months after the Jet Airways launched its daily service connecting Tiruchi with Mumbai and New Delhi, the airline has withdrawn it much to the disappointment of the travel industry and people of the region.
Notwithstanding the good patronage for the service introduced in late March on the New Delhi – Mumbai – Tiruchi – Mumbai – New Delhi sector every day, the airline stopped it from October 28 due to “operational reasons”.
The launch of the new service with much fanfare connecting Tiruchi directly with the country’s financial and political capitals gladdened tourists and the business community who had been seeking such a service for long.
The airline operated Boeing 737-800 series aircraft with more passenger seating capacity keeping in mind the traffic potential in this sector.
Domestic traffic movements on expected lines soared post launch of the flight service in the Mumbai – Tiruchi – Mumbai sector in view of the good load factor and also because of operation of a bigger aircraft as compared to ATR aircraft with lesser seats being operated on the Chennai – Tiruchi – Chennai sector.
Airline sources said that the service on the Mumbai – Tiruchi sector had been withdrawn from October 28 due “operational reasons” even while acknowledging that the passenger load factor had indeed been good to the extent of 80 to 83 %.
“The withdrawal of the service would have an impact on the industry and business circles,” the Tiruchi Tourism Federation, secretary, Mohamed Abubacker said in a representation addressed to the Jet Airways.
The introduction of the New Delhi – Mumbai – Tiruchi – Mumbai – New Delhi sector was a “dream come true” both for business community and travelling public since March 25 this year.
Ever since its introduction, the service was operating with an average passenger load factor of 85% on both directions and had an excellent traffic mix, the representation further said adding that the route had been very beneficial route to the North Indian community and businessmen.
Further, Tiruchi was a gateway to numerous surrounding areas which were feeders to passenger traffic – both domestic and international connecting via Mumbai.
The withdrawal of the service would have a very high impact on the industry and business, Mr. Abubacker said while appealing to the airline to continue the service on the sector.
The chairman, Confederation of Indian Industry (CII) (Southern Region), Tiruchi A.S. Ananthakrishnan said withdrawal of the service was definitely a setback to regular flyers from this part of the region to Mumbai and New Delhi.
Being a direct service, it proved beneficial to passengers proceeding to Mumbai and Delhi without change over of flight, Mr. Ananthakrishnan said.
The CII would soon take up the issue and discuss with other airlines as well as Jet Airways to motivate them to operate on the Tiruchi – Mumbai and Tiruchi – Delhi sectors given the good patronage enjoyed by the flight service to Mumbai, Mr. Ananthakrishnan added.
The CII, Tiruchi has already written to the Chairman, Airport Advisory Committee, Tiruchi and AIADMK Tiruchi Lok Sabha MP P. Kumar seeking direct flight services on the Tiruchi – Mumbai and Tiruchi – Delhi sectors.
Tiruchi international airport was the only one in the country with little connectivity to domestic destinations, it further said.
Travel circles strongly feel that the withdrawal of the service would hugely impact overall domestic passenger movements at the Tiruchi airport which has domestic connectivity to Chennai, Bengaluru and Kochi with services being operated using ATR aircraft.
Tiruchi definitely required a direct connectivity with Mumbai also because there were reputed national level higher educational institutions here, Mr. Ananthakrishnan said.
Yet another surprise comes from Jet Airways; now it reveals this deal cancellation
The Jet Airways and TruJet had earlier too attempted to strike a deal on ATR planes last year. The plan to wet lease planes from Jet Airways is on hold as of now and if it comes back to the negotiation tables, the deal can be done only by next year, the source said.