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Jet Airways to go under insolvency !!!

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The National Company Law Tribunal on Thursday admitted lenders move for bankruptcy proceedings for Jet Airways. A consortium of 26 bankers led by State Bank had taken the grounded Jet Airways to the NCLT to recover their dues of over Rs 8,500 crore.

The announcement came hours after stocks of the grounded airlines surged a whopping 146 per cent today in intra-day trading, leading to the Bombay Stock Exchange seeking clarification from the company.

 

Jet Airways, started over 25 years ago by airline-ticketing-agent-turned-entrepreneur Naresh Goyal, stopped flying on April 17 after it ran out of cash and the unpaid lessors took away most of its 100-odd operational airplanes.

The lenders have been trying to sell the airline as a going concern since the past five months but failed due to many a reason.

Apart from banks, the airline also owes over Rs 10,000 crore to its hundreds of vendors, primarily aircraft lessors and over Rs 3,000 crore to around 23,000 employees who have not been paid since March.

The airline has been having negative net worth for long and has run a loss of over Rs 13,000 crore in the past few years. Thus it has over Rs 36,500 crore of dues and being a services company negligible assets to recover.

Also, most of its domestic airport slots have been given away to other airlines by the government and so are some of its slots at some key international airports.

On the airplane asset side, Jet had only 16 on its book which are valued around Rs 5,000 crore as per some media reports, as the rest of its 123 fleet were on lease and most of them have been de-registered or taken away by the foreign lessors already.

Following a meeting of the lenders Monday, SBI had said that "after due deliberations, the lenders have decided to seek resolution for Jet Airways under the bankruptcy code since only a conditional bid was received".

The statement further said the move was necessitated as the prospective investor (a consortium of Etihad Airways and Hinduja group) wants some Sebi exemptions waiving the open offer requirement, which can be worked out better under the bankruptcy laws.

Two operational creditors--Shaman Wheels and Gaggar Enterprises-- had already taken the airline to the NCLT on June 10. The airline owes Rs 8.74 crore to Shaman Wheels and Rs 53 lakh to Gaggar Enterprises.

As the cash crisis worsened and lenders refused any lifeline to the airline under promoter chairman Goyal, who was forced to give up control on March 25, when lenders had in principle agreed to infuse Rs 1,500 crore for equity.

But that never materialized, as bankers were chary of the fate of the February 12 circular of the RBI which was being heard at the Supreme Court. Finally, on April 2, the apex court struck down the contentious circular, sealing the bank- led the process to resolve the crisis at the airline.

With the March 25 resolution, Etihad's 24 percent stake was halved and it lost its board representation as well along with Naresh Goyal and his wife Anita.

Finally, the airline was grounded on April 17, leaving over 23,000 employees unpaid for months in the lurch, and also sending airfares soaring by over 40 percent on average.

It can be noted that on April 8 through 12, bankers had put the airline on sale-offering 33 to 75 percent stake-of which the lenders own 51 percent now-to interested parties and received four preliminary bids and had planned to close the sale process by May 30.

 

 

https://www.indiatoday.in/business/story/jet-airways-bankruptcy-nclt-order-1552953-2019-06-20

 

 

now if we want to book business class , only option is air india i guess :giggle:

 

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40 minutes ago, Stan AF said:

So all that money Govinda, Go vindhaa huh??? How many 1000 crores is that?. This after SBI writing off 1 lakh crore in the last 2 years alone right? Tax payers are taken for a pain ride.

Lots more to come on this front. Yash Birla group has also become a defaulter.  how people will return the Mudra yojana money. All that will add to the NPAs

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1 hour ago, Haarkarjeetgaye said:

Disappointing  to see such a good airline fade away. I haven’t understood why this happened when there is increase in flying passengers.

 

Vistara has come up really well and are at par with what Jet used to provide.

Jet Has unusually high operating costs. Even Etihad (who is a near 25% share holder) doesn't have such high costs and Etihad flies mainly long distance. Ettihad simply refused to bail out Jet this time around. Also, aviation fuel has gotten expensive over the last 2-3 years. Jet did not pass down the increased cost to the passengers. Vistara, Air India and the budget airlines let the cost percolate to the passenger but Jet chose a volume based business model and it didn't pay off.

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12 minutes ago, Mariyam said:

Jet Has unusually high operating costs. Even Etihad (who is a near 25% share holder) doesn't have such high costs and Etihad flies mainly long distance. Ettihad simply refused to bail out Jet this time around. Also, aviation fuel has gotten expensive over the last 2-3 years. Jet did not pass down the increased cost to the passengers. Vistara, Air India and the budget airlines let the cost percolate to the passenger but Jet chose a volume based business model and it didn't pay off.

Would you know why were the operating costs were higher than other airlines. The other airlines would also follow similar operating procedures and cost buckets. I would assume that the newer airlines would have higher operating costs initially.

Aviation fuel should be same for all airlines. From what I remember, Jet Airways used to be expensive than other airlines barring Air India.

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3 minutes ago, Haarkarjeetgaye said:

Would you know why were the operating costs were higher than other airlines. The other airlines would also follow similar operating procedures and cost buckets. I would assume that the newer airlines would have higher operating costs initially.

Aviation fuel should be same for all airlines. From what I remember, Jet Airways used to be expensive than other airlines barring Air India.

Jet Air pays (when it could afford to) its staff well. They were the best pay masters in the domestic Indian aviation market.

In the major airports in India, Jet has fixed check-in counters/ portions of a terminal. This means that they have fixed hangars for their parked flights. Aside of Air India, no one has this privilege. And this costs them substantially. The other airlines do not have fixed checkin counters and their counters are decided by the flight traffic that day.

All the airlines have the same aviation fuel cost (except Air India, who get it subsidised), but the others pass down the increased fuel costs to the customers. Even the low cost airlines have done this. Jet tried to keep their prices constant and it bit them in the back side. 

Also Jet have an amazing points system, from a passenger point of view. They've lost out on a fair chunk on metro to metro revenue because they used to offer jet points quite liberally.

 

SBI and then Etihad bailed them out in the past. No one has agreed to yet and the management thought that they'd weather this storm like he had in the past. 

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7 minutes ago, Mariyam said:

Jet Air pays (when it could afford to) its staff well. They were the best pay masters in the domestic Indian aviation market.

In the major airports in India, Jet has fixed check-in counters/ portions of a terminal. This means that they have fixed hangars for their parked flights. Aside of Air India, no one has this privilege. And this costs them substantially. The other airlines do not have fixed checkin counters and their counters are decided by the flight traffic that day.

All the airlines have the same aviation fuel cost (except Air India, who get it subsidised), but the others pass down the increased fuel costs to the customers. Even the low cost airlines have done this. Jet tried to keep their prices constant and it bit them in the back side. 

Also Jet have an amazing points system, from a passenger point of view. They've lost out on a fair chunk on metro to metro revenue because they used to offer jet points quite liberally.

 

SBI and then Etihad bailed them out in the past. No one has agreed to yet and the management thought that they'd weather this storm like he had in the past. 

Thank you

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3 hours ago, Haarkarjeetgaye said:

Disappointing  to see such a good airline fade away. I haven’t understood why this happened when there is increase in flying passengers.

 

Vistara has come up really well and are at par with what Jet used to provide.

In FY17, Vistara's net loss widened to Rs 518 crore from Rs 400 crore in FY16.

 

Airline is a loss making business.

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6 hours ago, Stan AF said:

So all that money Govinda, Go vindhaa huh??? How many 1000 crores is that?. This after SBI writing off 1 lakh crore in the last 2 years alone right? Tax payers are taken for a pain ride.

 

aviation industry itself is a low margin business .. and our aviation policy is also pretty bad  .. 

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Indians dont want quality. They look first and foremost at cost. Thats not a bad thing per say. It just the way things are.

 

The new link of Indigo to Istanbul is basically going to open all of Europe for Indians at a very low price. Very hard for anybody to operate. Even the gulf airlines are going to feel the pinch.

 

Those cribbing about tax payer money. (a) Most Indians dont really pay enough taxes to crib (b) Even those that pay taxes receive more in benefits (c) SBI just like any bank is a business. Sometimes loans are good and sometimes loans are bad. NPA's overall are declining https://www.businesstoday.in/sectors/banks/npas-plunge-to-93-in-fy19-deeper-than-rbi-estimate-crisil/story/355073.html

The entire point of new bankruptcy code is to ensure that capital is out of the street again rather than being stuck in the zombie organisations.

 

GoI on its part must axe Air India from their books. 7,600 crore loss for AI in this fiscal is simply criminal. That money can be invested for eg in improving airports. Air India being operational despite posting a losses results in no private sector long haul player.

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Re Vistara

 

its got backers with deep pockets. Tata & Sons basically makes its money on TCS and pumps it into nearly every other company. 500 crore is a drop in the ocean. TCS made profits of 8000 crore plus in the last quarter.

 

https://www.livemint.com/companies/news/vistara-promoters-infuse-more-than-4-000-crore-over-12-months-1558893397682.html

 

So long as they are ready to keep pumping money into Vistara they are in the long term going to make life difficult even for a well run airline like Indigo.

 

Goyal in the grand scheme of things was just a small player. I do hope IndiGo successes but maybe in the grand scheme of things even they are small players. 

 

 

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1 hour ago, Stuge said:

Economy (Cattle class )

Premium Economy (Premium Cattle class with wider seats)

Business Class 

Premium economy has three types. Flexi, normal and ...

Business class also has two types. Mainly the difference is change fees and luggage allowed. 

Customer service excellent.

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49 minutes ago, G_B_ said:

Re Vistara

 

its got backers with deep pockets. Tata & Sons basically makes its money on TCS and pumps it into nearly every other company. 500 crore is a drop in the ocean. TCS made profits of 8000 crore plus in the last quarter.

 

https://www.livemint.com/companies/news/vistara-promoters-infuse-more-than-4-000-crore-over-12-months-1558893397682.html

 

So long as they are ready to keep pumping money into Vistara they are in the long term going to make life difficult even for a well run airline like Indigo.

 

Goyal in the grand scheme of things was just a small player. I do hope IndiGo successes but maybe in the grand scheme of things even they are small players. 

 

 

Singapore airlines has no stake in Vistara?

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