Revival Of Jet Airways India Ltd At Risk As Days Roll By Since Its Operations Were Completely Halted

604

New Delhi: A revival of Jet Airways India Ltd., once the nation’s biggest carrier by market value, is at risk as days roll by since its operations were completely halted. While the cash-strapped carrier awaits potential investors to pump in money, rivals are aggressively going after its most prized assets.

A government desperate to limit public backlash after flight ticket prices escalated is parceling off landing and parking slots at congested airports. Lessors are also adding to the woes by allocating grounded aircraft to competitors.

“It appears to me that lenders are not very confident of getting any serious bid,” said Harsh Vardhan, chairman of New Delhi-based Starair Consulting. “You can not hold on to slots, and planes are not Jet Airways’ property. They have to find a buyer as soon as possible.”

Jet Airways, the oldest surviving private airline which broke into a monopoly of Air India Ltd., had a fleet of 124 and flew profitable routes like connecting India, the fastest growing aviation market in the world, with London and Toronto. With nearly 23,000 jobs at stake, its collapse last week couldn’t have at worse time for Prime Minister Narendra Modi who’s seeking a second term based on his business-friendly image.

While the arrangement to give Jet’s landing slots and aircraft to rivals is temporary, the process to swap them again is complicated and is the domain of airports. It may get more difficult once rivals start new flights and sell tickets in advance, and that could potentially leave close to nothing for a potential new owner.

Jet Airways started flying in the early-1990s after India liberalized its economy, and quickly cemented its spot as a leading airline offering an alternative to Air India, while averting several downturns that forced dozens of its peers to close shop. But a boom of budget airlines in the mid 2000s, on top on rising fuel prices and a weakening rupee, kept adding to Jet Airways’ costs in the notoriously price-sensitive market.

The airline, which controlled 13.6 percent of the local market as recently as January, needs 85 billion rupees ($1.2 billion) to restart operations. So far, it isn’t clear whether Jet Airways will find a buyer to fly again, or if lenders will take it to a bankruptcy court. Over the weekend, local media reported Mukesh Ambani, Asia’s richest man, and salt-to-software conglomerate Tata Group are keen to pick up a stake or purchase Jet’s assets.

Shares of Jet Airways gained as much as 9.2 percent to 168.95 rupees in Mumbai and were trading at 167.35 rupees as of 11:06 a.m. local time. The shares plummeted 36 percent in the previous two trading sessions, after all flights were grounded last week.

Add comment


Security code
Refresh