Abu Dhabi, UAEMonday 1 June 2020

Jet Airways shares surge on possible Hinduja Group bid

Once India's second largest, the airline is burdened with more than $1.2bn of debt

Jet Airways aircraft are seen parked at the Chhatrapati Shivaji Maharaj International Airport in Mumbai, India. Reuters
Jet Airways aircraft are seen parked at the Chhatrapati Shivaji Maharaj International Airport in Mumbai, India. Reuters

Shares of India's Jet Airways continued to rise on Wednesday after it emerged that conglomerate Hinduja Group is eyeing the opportunity to bid for the debt-laden, grounded airline.

In afternoon trade, shares of Jet Airways were up more than 7 per cent, continuing the rally from Tuesday as reports started to surface on the potential bid. The company's shares have gained 27 per cent in the past three days.

“Hinduja Group is evaluating the Jet Airways opportunity,” the Mumbai-based conglomerate said in a statement.

The Hinduja Group, which is led by Indian billionaire brothers Gopichand and Srichand Hinduja, has interests in sectors ranging from banking to health care.

Jet Airways is burdened with around $1.2 billion (Dh4.4bn) of debt. It ran into losses amid fierce competition in India's aviation market from budget airlines including SpiceJet and IndiGo. Etihad Airways owns a 24 per cent stake in Jet Airways.

Mark Martin, the chief executive of aviation consultancy Martin Consulting, said the fact that Hinduja is considering investing in Jet Airways is “promising and a positive move”.

“They know how to turn around a company,” said Mr Martin. “It gives Jet a tremendous boost and the backing now given their position.”

Jet Airways and State Bank of India, the lead lender that is trying to find a buyer for the airline, did not respond to requests for comment.

The airline, once India's second largest, was forced to suspend all its flights in April as lenders refused to inject more funds into the company. Jet Airways owes money to employees, including pilots, as well as fuel suppliers and plane lessors.

With thousands of jobs on the line, employees of Jet Airways on Tuesday staged a protest outside India's civil aviation ministry, demanding the revival of the airline and salary payments.

Last week, Vinay Dube, the airline's chief executive, and Amit Agarwal, its deputy chief executive and chief financial officer, resigned. This further raised concerns about Jet Airway's future.

It is the second airline in India to have grounded its entire fleet in the past decade after Kingfisher Airlines went out of business in 2012. McKinsey & Co is advising Jet Airways and its primary lender on how to revive the airline and has suggested that after a restructure, the airline would require 60 to 70 aircraft, compared to the earlier 120, India Today magazine reported.

The interest being expressed by the Hinduja Group suggests that “there is still a reasonable amount of value in Jet”, said Mr Martin.

Updated: May 22, 2019 01:16 PM



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