While the reluctance of SBI-led consortium of lenders to release interim funding of Rs 1,000 crore has left the ailing carrier into an unnavigable impasse, it was perhaps the re-entry bid of founder Naresh Goyal that led to the beginning of the end for the carrier.
The stock of Jet Airways registered its steepest fall since its listing as it nosedived more than 28 percent intraday on April 18. The beleaguered airline's stock had remained resilient for the past six months despite all the negative news revolving around its operations.
The stock touched a low of Rs 174.30 on BSE, down 27.93 percent from its previous close. At 1109 hrs, it was trading at a paltry 6.9 percent above its 52-week low of Rs 163.
So what was the last straw that broke the camel's back?
The reluctance of SBI-led consortium of lenders to release interim funding of Rs 1,000 crore left the ailing carrier cash-strapped with no funds for fuel and most critical operations, forcing it to suspend all operations. The stock also started to react negatively on April 16.
The investors finally gave up on the stock and it started falling when reports emerged that founder Naresh Goyal is re-entering the bidding process for the airline.
Even as Goyal quit the race, lenders refused to release funds, which sent the stock down.
According to market analysts, the tale of Jet is one for the ages, as despite witnessing a similar downfall as Kingfisher Airlines, the market continued to hold faith in the airline till the suspension of all flights.
"The downfall of Jet Airways was eerily similar to Kingfisher Airlines. What is not similar is the stock price reaction and the status of the promoters’ liability. The stock continued to quote at above Rs 260/- with a market cap of over Rs 3,000 crore till Jet announced suspension of all flights," said Market Analyst, Ambareesh Baliga.
"I do not understand the logic for such a high survival premium being paid by speculators (since it was not an investment grade stock). This was a binary event – either Jet survives or it goes into liquidation," he added.
With one foot already in the grave, Jet's next destination appears to be the bankruptcy court.
The carrier currently has accrued debt of over Rs 8,000 crore and its only hope of survival is a buyout.
The lenders are hopeful that a new investor will bring the airline out of its woes.
However, analysts believe the hope of survival is lower than ever.
"The 8-9 aircrafts they own are pledged. The slots at the airport and parking bays, international flying permit etc can disappear in the next 2-3 months if they continue to stay grounded. That leaves only the Jet Brand which may have a slightly longer shelf life," Baliga added.
"It is a wake-up call for the aviation authorities to seriously ponder as to why India is emerging as a treacherous graveyard for Indian carriers. It is a reflection not only on the sub-optimal management of the operations by the owners of these carriers but also of the sheer neglect by the aviation mandarins of incessant pleas from the industry to introduce sensible & reasonable taxation & tariff policies as well as other expenses charged by the airports," said Ajay Bodke, CEO, PMS Prabhudas Lilladher.Jet Airways listed on exchanges on March 14, 2005, with an issue price of Rs 1,100 per share. It was the pioneer among private sector full-service carriers in India and consistently figured among the most-loved airlines for its warm hospitality and stellar service standards.
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