Indian media reports suggest that bidders for the country's once largest private carriers, Jet Airways, whose debt is in excess of over US$1 billion, appear uninterested in following up on their expressions of interest. And no other investor stepping in as White Knight is in sight. It seems that the fate of Jet Airways is sealed.
With just a week to go for final submission of bids, a report by the Economic Times (ET) noted that three of the four qualified bidders - Etihad Airways, TPG Capital and Indigo Partners - have
not signed nondisclosure agreements, a must for conducting due diligence.
None of the bidders, barring National Investment and Infrastructure Fund (NIIF), has been accessing the data room where potential investors are supposed to peruse Jet’s accounts and key documents as part of the due diligence. They have till May 10 to submit their bids.
Staring at an obituary
The ET report speculated that the apparent reluctance among the key bidders to submit final bids most likely started after the government began allocating Jet Airways’ planes and slots to its peers, a move which resulted in widespread criticism.
“We are staring at an obituary,” the paper quoted an executive at one of Jet’s key lenders as saying.
Meanwhile, in the last two weeks a last-ditch, largely futile, attempt to save the carrier, Jet’s top management and executives including CEO Vinay Dube, finance chief Amit Agarwal and chief strategy officer Rajesh Prasad have met executives of India’s biggest business houses, including Mahindra, Adani, and Tata, as well as Reliance Industries, appealing for an investment.
Clutching at straws
The Jet executives reportedly presented a business plan based on the airline returning to operations at half its original size, with about 50 planes. However, none of the conglomerates responded positively, according to the ET report
“The management is clutching at straws,” said Shukor Yusof, founder of Malaysian research firm Endau Analytics. “Jet Airways’ debt is in excess of over US$1 billion. I suspect there aren’t that many brave souls out there who would come in, eyes wide open, and be willing to assume the liabilities (irrespective of the haircut offered). The airline also has considerable debt owed to suppliers, lessors etc. In my view, it’s over,” ET quoted him as saying.
As CFG has been reporting earlier, Jet Airways suspended all flights on April 17, as it ran out of cash to sustain operations and failed to raise interim loans from banks. More than 18,000 employees have been left in the lurch, planes are being deregistered and given away to competitors. Flight slots at key airports Delhi and Mumbai are also being given away to Jet’s peers.
Nol van Fenema