ZCZC
BCN-22
INDIA-ECONOMY-AVIATION-JETAIRWAY
Jet shares nosedive after flights grounded, lenders ‘hopeful’
MUMBAI, April 18, 2019 (BSS/AFP) – Jet Airways shares plunged more than 32
percent on Thursday, hours after the Indian carrier’s final flight landed
following a decision to ground its entire fleet.
The Mumbai-based carrier is on the edge of bankruptcy and has failed to
secure emergency funding from banks, forcing it to suspend all operations
late Wednesday.
Jet’s stock fell more than 32 percent to 162.15 rupees on the Bombay Stock
Exchange Thursday. It was worth more than four times that a year ago.
The lenders that control the airline said Thursday they were focusing on
finding a buyer for Jet, which was until recently India’s second-biggest
carrier by market share.
“Lenders are reasonably hopeful that the bid process is likely to be
successful in determining fair value of the enterprise in a transparent
manner,” they said in a statement.
The State Bank of India-led consortium is looking to sell a controlling
stake in Jet and has shortlisted four potential buyers, including Etihad
Airways, which already owns 24 percent.
The four have until May 10 to submit formal bids.
But until then, the carrier’s remaining fleet is grounded, with a final
flight from Amritsar to Mumbai landing in the early hours of Thursday.
A collapse of Jet, and the loss of more than 20,000 jobs, would deal a
blow to Prime Minister Narendra Modi’s pro-business reputation as he seeks a
second term in ongoing national elections.
The chairman of state-carrier Air India, which has been bailed out by the
government several times, said Jet’s temporary closure was a setback for
India’s aviation sector.
“We have in the past witnessed many airlines shutting shop and it is time
to appreciate that the razor thin margins which airlines are forced to
operate with in a competitive environment results in a scenario that
encourages unsustainability,” Ashwani Lohani said in a Facebook post.
Jet, which has debts of more than $1 billion, has been in a tailspin for
months. It has defaulted on loans and failed to pay many staff since the
start of the year.
The carrier cancelled hundreds of flights in recent weeks, stranding
thousands of passengers. It was operating just five planes before Wednesday’s
grounding, down from 120 last year.
Bad investments, competition from several low-cost carriers, high oil
prices and a weak rupee contributed to Jet’s financial demise, experts say.
Its plight has been compared to that of Kingfisher Airlines, which ceased
operations in 2012 before later going bust, causing thousands of job losses
and huge financial costs to lenders.
BSS/AFP/HR/1240