INDIA: What Is Happening At Jet Airways

Jet Airways' pilots appealed to the State Bank of India to release funds to the tune of Rs. 1,500 crore for the airline, trade union National Aviator's Guild said on Monday.

The trade union, which has more than 1,100 pilots of the airline as its members, also asked Prime Minister Narendra Modi to help in saving 20,000 jobs at stake.

The SBI-led group of lenders had last month taken control of the airline and agreed to provide an immediate funding support of Rs. 1,500 crore.

Cash-strapped Jet Airways' management is meeting its group of lenders, led by the State Bank of India, on Monday. The lenders are meeting to decide whether to release crucial funds to keep the debt ridden airline flying as it teeters on the brink of collapse.

Jet Airways' employees staged a protest in Mumbai demanding that the debt-laden airline be saved from shutting down.

Meanwhile, a report suggested that SpiceJet is hiring engineers and pilots at much lower pay than their current salaries at the financially-troubled Jet.

Pilots from Jet Airways are being asked to take salary cuts of 25-30 per cent while engineers have been advised to settle at 50 per cent of their current pay package.

The SBI-led consortium is trying to find a buyer for Jet, which was until recently the country's second-biggest airline by market share.

The meeting also assumes significance as it comes amid thousands of passengers being stranded after the cancellation of international flights in the last few days.

Hundreds of staff protested in Delhi and Mumbai over the weekend demanding to be paid and calling for the company to be rescued.

The airline has only seven jets left after dozens of others were seized by creditors in recent weeks. Pilots, engineers, and ground staff who have not been paid for three months and have said they will call for a strike if the banks do not inject emergency funds.

A deadline passed on Friday for prospective bidders to express an interest in acquiring a 75 per cent stake in the carrier.
The Prime Minister's Office had last Friday convened a crisis meeting on Friday evening.

Jet Airways shares rose as much as 1.48 per cent on Monday. At 11:42 am, the Jet Airways stock traded 0.46 per cent higher at Rs. 262.05 apiece on the NSE, outperforming the broader markets which were up 0.24 per cent.


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INDIA: Jet Airways Cancels All International Flights

Hundreds of Passengers are stranded in India and around the world after Jet Airways suspended all international flights.

Flights from London, Paris and Amsterdam are among those grounded amid fears about the survival of India's largest private airline.

The airline cancelled all international flights until Monday when, according to reports, it will meet its lenders again to try to secure funding.

Jet Airways is saddled with more than $1bn (£765m) of debt.

It is seeking a financial lifeline to avoid collapse and, on Thursday, grounded 10 planes over unpaid fees to leasing firms .

These were the latest flights to be grounded and it was not clear how many of its fleet of more than 100 planes was still in operation. Local reports suggested that it was barely a dozen.

The airline flies on 600 domestic and 380 international routes - but carriers in India must maintain a fleet of least 20 aircraft to continue to operate international services.

From London, the airline initially confirmed it had cancelled its flights between London, Paris and Amsterdam and India for 12 April, but later said that all international flights would be cancelled between 12 and 15 April.

It said it regrets the inconvenience caused to its passengers and was working to minimise guest inconvenience.

The airline's management and its key stakeholders including its consortium of lenders, continue to work closely towards resolving the current situation, it said.

There was no statement about the status of domestic flights.

Television channels in India reported that the prime minister's office had called for an urgent meeting to discuss the airline.

They also reported remarks by government officials saying Jet Airways only had funds to operate six to seven aircraft over the weekend.

India's Aviation Minister, Suresh Prabhu, had tweeted that his ministry would review issues related to Jet Airways and take necessary steps to minimise passenger inconvenience and ensure their safety.

Television channels in India reported that the prime minister's office had called for an urgent meeting to discuss the airline.

They also reported remarks by government officials saying Jet Airways only had funds to operate six to seven aircraft over the weekend.

India's Aviation Minister, Suresh Prabhu, had tweeted that his ministry would review issues related to Jet Airways and take necessary steps to minimise passenger inconvenience and ensure their safety.

Jet Airways owes money to employees and suppliers and in recent weeks it has grounded aircraft and cancelled thousands of flights as its financial strains worsened.

The pilots union in India is planning a protest on Saturday and has written to the airline demanding that employees are paid. Staff of the airline were pictured by Priyanka Iyer of Business Television India marching to the company's headquarters in Mumbai.

In March, when the crisis at Jet Airways led to thousands of flights being cancelled, the government immediately stepped in and asked public sector banks to rescue the private carrier.

It was a rare move. With India holding a national election, Prime Minister Narendra Modi's government did not want the airline to be grounded as that would have affected 23,000 jobs.

The lenders which took control of the airline have only released a fraction of the amount they had promised so the airline has not been able to pay aircraft leasing companies, which means its fleet has shrunk further from more than 100 it had at the start of the year.

The lenders have started accepting bids from potential investors, but that process will take a couple of months to complete. And many analysts fear that Jet Airways will not survive even a week if immediate cash is not provided to keep the operations running.

The airline was founded by Naresh Goyal more than 25 years ago and he and his family currently own 52% of the airline, although that majority stake is expected to be lost as lenders' restructure the debt.

A consortium of investors led by the State Bank of India (SBI) took control of the airline in March.

The group is searching for a new investor to acquire a stake of up to 75% in Jet Airways. The deadline for bids had been extended to Friday, according to reports.

Ellis Taylor, deputy Asia editor of Flight Global siad the airline was in a precarious position.

The interim lifeline that the carrier talked about two weeks ago looks like it won't materialise any time soon, and that really leaves its future looking bleak, he said.

There were reports in local media that India's aviation ministry might review the regulations setting the fleet cap, which could allow the airline to resume international services.


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INDIA: Jet Airways Wants Short-term Loan From State Bank Of India

Jet Airways, which is struggling to keep its fleet running and has fallen behind on salary payments, is now looking to secure a short-term loan.

The full-service carrier is in talks with the country’s largest lender State Bank of India (SBI) to raise 15 billion rupees (US$214.9 million) to meet its working capital requirements and fulfill some payment obligations.

Jet’s strategic partner, Etihad Airways of Abu Dhabi, which holds a 24% stake in the airline, is likely to serve as a guarantor for the loan.

Interestingly SBI, which is the lead lender of the airline, had a fortnight ago ordered Ernst & Young to conduct a forensic audit of the airline’s books.

Jet Airways has posted three consecutive quarterly losses of more than 10 billion rupees since March 2018, and as of September 30 had 80.52 billion rupees of debt on its books.

Jet Airways has a backlog of more than two months in unpaid salaries to its senior staff, including pilots and engineers.

The airline is also negotiating with overseas lenders to raise $350 million with Etihad again acting as guarantor.

The airline’s founder, Naresh Goyal, is looking to infuse capital in such a way that he does not have to lose control of Jet Airways, which he set up 25 years ago.

Earlier, the salt-to-software conglomerate Tata Sons had expressed a desire to acquire the airline, but wanted Goyal to relinquish his controlling stake, which was not acceptable to the airline’s founder.


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INDIA: Jet Airways And Its Woes

The past six months have been difficult for Jet Airways.

In additoin to financial problems, Jet Airways has as well had ups and downs over safety and tax issues.

Jet Airways has been in the red for two consecutive quarters and is also under market regulator Securities and Exchange Board of India’s (SEBI) lens.

Jet Airways issues are not particular to the airline but symptomatic of a larger malaise. The Indian aviation sector is facing economic headwinds in the form of rising global oil prices and a depreciating rupee.

Jet, for instance, had debt of Rs7,364 crore ($1.01 billion) on its books as of June.

Given its precarious financial position, the airline was reported to have even considered slashing salaries. On Sep. 19, it announced that there would not be free meals on economy class bookings done from Sept. 25.

Things have gone wrong with India’s second-largest carrier by market share in the last six months.

March 2018, Jet Airways reported a loss of Rs1,036 crore in the Jan-March quarter as revenue declines and costs increase significantly. The company defers the March salaries of some employees citing circumstances beyond its control.

April 2018,Gave up bidding for Air India citing the complex process.

May 2018, Government refused to approve Jet’s merger with its subsidiary JetLite, nearly three years after the proposal was made.

June 2018, Jet announced new check-in baggage norms. The 15kg of free check-in luggage for economy class will have to be in one bag. Business class passengers can carry 30kg in two bags.

August 2018, Considers a 25% pay cut for employees.

August 2018, Indefinitely defers announcement of financial results for the April-June quarter of financial year 2019.

August 2018, On Aug. 12, the Directorate General of Civil Aviation announces an audit to assess Jet’s financial health. State Bank of India asks the firm to provide enough collateral for emergency funding.

August 2018, On Aug. 27, the company announces losses of Rs1,323 crore for the April-June 2018 period.

September 2018, On Sep.19, the income-tax department conducts surveys in the company’s Mumbai and Delhi offices over allegations of financial misappropriation.

September 2018, On Sep. 20 about 30 passengers on a Jet Airways flight from Mumbai to Jaipur suffer nose and ear bleeding after the cabin crew forgets to activate the internal pressure control. India’s civil aviation minister Suresh Prabhu orders a safety audit of all airlines and airports.


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INDIA: Kingfisher Airlines Not Flying Yet Oil Is Cheap

With banks going after him to recover unpaid loans given to long-grounded Kingfisher Airlines, beleaguered businessman Vijay Mallya remains defiant and says the "only regret" he has that the carrier is not flying when the oil price has dipped so low.

"I have no regrets as such. Perhaps the only regret is that Kingfisher Airlines is not flying today when the oil price is so low," Mallya said.

Global crude oil prices have fallen by almost 75 per cent from the peak seen in mid-2014. While airlines in India still complain that the fall in crude prices has not got translated fully in the aviation fuel prices, their fuel cost has still come down by 30-40 per cent.

Most airlines reported better financials in the last quarter on account of low oil prices.

Mallya, widely known as the 'King of Good Times' in his heydays, had to quit recently as Chairman of United Spirits -- a company founded by his family in which he sold majority stake to UK-based liquor giant Diageo. As part of the deal that also ended a year-long boardroom battle at United Spirits, Diageo has agreed to pay Mallya USD 75 million.

The settlement was sealed even as at least three banks including state-run giant SBI declaring Kingfisher, Mallya and his group holding firm UBHL (United Breweries Holding Ltd) as 'wilful defaulters' to recover unpaid loans amounting to thousands of crores of rupees.

Once billed as the most luxurious airline, Kingfisher had to be grounded in October 2012 after it landed in a major financial crisis with huge loans and payment defaults including to the oil companies and airports.

When asked about his long professional journey, Mallya who inherited the UB Group from his father as a young 28-year-old, said he has got "nothing to prove".

"I built India's biggest beer company. I built India's biggest spirits company. Okay, Kingfisher Airlines went wrong.

But there is a whole list of reasons why it went wrong," Mallya told PTI in an interview days after Diageo settlement.

"Aisa nahi ki bewakoofi se band ho gaya (it did not shut down for some stupid reason)... There were genuine reasons. It did not go well. You experience ups and downs in life... (but in the end) I have enough to be proud of," he said.

Mallya, known for his flamboyance and lavish parties, also brushed aside the criticism about he deciding to spend more time in England after Diageo deal.

"I have had my residence in England (for a long time) So what is new? All I have said is that I would like to spend more with my family," he said.

State Bank of India yesterday approached the Debt Recovery Tribunal seeking action against the UB Group promoter for defaulting on loans, including his arrest and impounding of his passport.

SBI, which heads the consortium of 17 lenders to Kingfisher, has moved the Tribunal in Bengaluru against the airline's chairman Mallya in a bid to recover over Rs 7,000-crore dud loans from him.

Besides SBI, Punjab National Bank and United Bank have also declared Mallya, his group holding company UBHL and Kingfisher Airlines wilful defaulters.

As part of Diageo deal, Mallya has also relinquished his position to control IPL franchise Royal Challengers Bangalore.

However, he has been appointed Chief Mentor of the team and his son Siddharth has become a director.

While he has already asserted that remains in charge of his other sporting interest, the Force India Formula 1 team, Mallya said he will remain actively involved in the running of RCB.

"My son is a director and I have been appointed Chief Mentor. What does that mean? If I am going away why should I be Chief Mentor? I will be part of the planning and I will be around during the tournament. In my statement, I have said that I want to win the IPL trophy. If I am not associated at all, why would I make that statement," Mallya said.

The lenders are now eyeing the Rs 515-crore bounty sealed by Mallya as part of a 'sweetheart deal' with Diageo to exit United Spirits.

Diageo has in return agreed to absolve Mallya of all his "personal liabilities' with regard to alleged financial irregularities relating to dealings with UB Group entities.

Diageo is the majority shareholder of USL with a 54.78 per cent holding, excluding the 2.38 per cent owned by the USL Benefit Trust.

Mallya personally held a small stake of 0.01 per cent in USL at the end of December 2015, while his group firms owned further 3.99 per cent stake. However, more than half of these shares are pledged with banks.

In case of Kingfisher, the trading in its shares have been suspended for long due to its non-compliance to various listing requirements including its failure to make timely disclosure of shareholding data and other details.

As per the latest shareholding data disclosure till September 2014, it had over 2.33 lakh small retail investors, over 6,200 HNIs, 13 banks and other domestic financial institutions, as also five promoter entities.

Ironically, the number of public shareholders across all categories is higher than the levels before the airline was grounded in October 2012. The total number of public shareholders has gone up during this period from 2.1 lakh to over 2.4 lakh.

The company now commands a market cap of just about Rs 110 crore, as against that of close to Rs 10,000 crore before it landed in financial mess leading to its grounding.