Crisis hit Jet Airways, which is in talks with multiple interested parties for fund infusion, is said to have once again sought the help from Bahrain national Capt Hameed Ali for furthering its discussions with Etihad Airways management.
Ali was actively involved Etihad's buy of 24% stake in Jet in 2013. The development comes in the backdrop of reports of Jet Airways promoter Naresh Goyal relenting to relinquish control over the airline's management in order to make things easier for investors to pitch in. Goyal was earlier adamant on not diluting his stake (along with his family) in the airline, which currently stands at 51%.
An email sent to Jet seeking comments for the story did not elicit any response.
However. analysts claim that the deal with Etihad is not going to be an easy one as Indian regulations forbid foreign airlines from owning more than 49% equity in the airline. Further, Etihad itself is said to be going through difficult times and is believed to have been in talks with rival Emirates for takeover. Both the airlines, Etihad and Emirates, had denied the reports in September. Australia-based aviation consultancy firm CAPA had in March claimed that Etihad will sell off its entire stake by December, though the Gulf-based airline had strongly denied it.
Goyal's decision to dilute his stake will also help it in taking the talks further with Mumbai-based Tata Sons, which has shown preliminary interest in the carrier. The point of contention so far is that Tata Group is demanding a controlling stake of 51%, which was being opposed by Goyal. Tata Sons wants to merge Jet with Vistara, according to sources.
Concerned over severe losses in the past several quarters, Jet Airways's management is currently implementing a turnaround plan, and aiming to save around Rs 2,000 crore over the next couple of years through measures, including sub-leasing some of its fleet, renegotiation of contracts, better utilisation of resources. Cost savings of over Rs 500 crore have already been realised to date (in the first half of fiscal 2019), the airline said in a statement.
Meanwhile, ratings agency Icra in its latest report on aviation sector on Thursday said that industry's financial health has nosedived, with three listed airlines reporting a combined net loss of Rs 3,640 crore in the first half of fiscal 2019. In other words, the three listed airlines together have lost around Rs 20 crore per day during the first half. Kinjal Shah, VP and co-head, corporate sector Ratings, Icra, said , "The overall debt levels in the industry remain high and would require equity infusion to bring the same to reasonable levels. Icra believes an equity infusion of Rs 35,000 crore would be needed over the next 3-4 years."
The report said that in order to contain further losses, the domestic airlines have resorted to several measures, which include among others, rationalisation of non-fuel costs, network review, rationalisation of routes, and manpower reduction. Airlines are also inducting fuel efficient aircraft in their fleet. Some airlines have also sought approval for deferment of payments to the vendors and lessors and are also delaying payment of salaries to employees, so as to tide over their short-term cash flow mismatches. Airlines are also focusing on increasing their ancillary revenues, which currently contribute to less than 10% of the revenues of domestic airlines, as against much higher share of revenues (10-20%) in the developed markets.
TURBULENCE IN THE AIR
- 51% – stake Tatas are reportedly asking in Jet Airways
- Rs 2,000 crore – Jet plans to save through cost cutting measures
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Jet Airways")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}