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Jet Airways Stock

? What I do


Aviation is a very under-penetrated market in India. Even though the demand to travel with flight is rising, there are still not many aircraft in the country. For the numbers, India has 565 commercial aircraft for a population of 1.3 billion. Whereas the US has 7,309 commercial aircraft and its population is just 328 million. Along with that, the airports of India are underdeveloped compared to those of other countries. For instance, at most of the airports in India, there is only a single operational runway whereas countries like the US have 5 to 6 runways on most of their runways.
It is not the first time that an Airline company has fallen down. Many companies before Jet Airways have been shut down in a similar manner. Some of them are:
  • Kingfisher Airlines
  • Air Deccan    
  • Air India Cargo
  • Indian Airlines
  • Sahara Airlines
Jet Airways (India) Ltd. is an Indian international airline based in Mumbai, India which as of 17 April 2019 has currently temporary suspended all flight operations. As of October 2017, it was the second-largest airline in India after IndiGo, with a 17.8% passenger market share.
Jet Tailwinds International, whose equity capital was held by Naresh Goyal (60%), Gulf Air (20%) and Kuwait Airways(20%).
 
5 Reasons for Jet Airways failure :
  1. Merging Sahara Airlines with Jet Airways
  2. Jet Airways re-branded Sahara Airways as JetLite
  3. Naresh Goyal decided to lead the company on his own and not to hire any professional for it
  4. The company was operating as a full-service airline
  5. They kept on taking debts and spending more than their earnings 

Why Government should not Bailout Jet Airways?
1. Despite of the fact that its an private player, INDIAN Gov tried to help it via lenders like SBI and other banks. Also we have debt ridden AirIndia and India Post to help financially.
2. Jet Airways toppled due to inefficiency, carelessness and also reckless purchaes.
- Reckless purchases - when Naresh Goyal bought Air Sahara at 1450cr, also Andhadhudh purchases of new planes.
- Inefficiency to save money by luring more flyers, which instead opted for other carriers which provided them cheap flights.(keep in mind Indian civil-aviation works differently from rest of World).
- Carelessness when Naresh Goyal never heard the right advice given at right time.
https://www.moneycontrol.com/news/business/companies/sbi-files-insolvency-plea-against-jet-airways-at-nclt-airline-may-get-renewed-interest-4110431.html

What is common in all cases?

The most common thing you will notice in all the above cases is that they all were, at some point, merged with another airline company.
Kingfisher Airlines bought Air Deccan. Kingfisher was a full-service airline whereas Air Deccan was a low-cost airline. When Kingfisher bought Air Deccan, they implemented some changes to Air Deccan’s fleet and the result we all know. Both the companies faced a downfall.
When Air India and Indian Airlines merged. Both the companies were doing good in their business. After the merger, they both fall down on their faces.
Jet Airways merged with Sahara Airlines and Jet rebranded Sahara as “Jet Lite”. They both have no existence, as of now.
So, most of the times, when an Airline merged with another airline, both companies faced problems. It is because of the difference in the nature of an Airline company.

Reasons for Jet Airway’s Failure

There are many reasons for the failure of Jet Airways. Here are just a few of them:
1. Merger: Merging Sahara Airlines with Jet Airways can be called as a mistake of Jet Airways. Sahara was acquired by  Jet Airways for $500 million which was not an appropriate price of the company.

2. Rebranding Sahara: This can be called as the biggest reason for the failure of JetLite. Jet Airways rebranded Sahara Airways as JetLite. Due to this, the customers of Sahara were out of Jet’s hands.

3. Mismanagement: Of course, management is the backbone of any company. However, the founder of Jet Airways, Naresh Goyal decided to lead the company on his own and not to hire any professional for it. Many people say that he took many bad financial decisions. Along with this, he only had one management team for all the operations. Managing an airline company which has acquired another company needs at least 2 management teams.
4. Full-service airline: The company was operating as a full-service airline. Operating in India as a full-service airline is not an easy task. You need very strong financial support and customer relationship. That is why most of the companies focus on the middle-class people and keep the prices as low as possible.
5. Drowning in Debts: Jet Airways didn’t care about the money even when they had none of it. They kept on taking debts and spending more than their earnings. The employees get many perks and all of them were happy. But spending more than what you earn is always a bad decision.

Buying Proposals

Jason Unsworth, who is a British Entrepreneur and CEO of Atmosphere Intercontinental Airline, expressed his interest in buying a controlling stake in Jet Airways.
However, Jason was told by the Jet Airways that he needs to interact with SBI Caps Limited as they are leading the resolution plan of Jet Airways.
When Jason wrote to the Jet Airways’ lenders, he received no response from their side. He later wrote to Jet Airways’ CEO Vinay Dube, about the proposal for buying the stakes of their company. Jason said he was provided with contacts of SBI to get in touch with. He is also talking with other Indian entrepreneur investors for financing his bid for buying the stakes in Jet Airways.

Conclusion

Jet Airways is on the verge of Bankruptcy. However, there are still some hopes for it. Many entrepreneurs have come forward to provide jobs to the people who lost their jobs due to Jet Airways crisis. It is still unclear what will happen next. If any company buy Jet Airways, there are some chances that the Jet Airways employees will get their due salaries. Also, it can be possible that the Government decides to help the company and its employees.
1. If you holding stock of Jet Airways then hold tightly for long term
2. Don't sell in panic.
3. Don't open any fresh position in this stock till issues will solve.

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