Foreign airlines can fuel homegrown bids for Air India. Naresh Goyal'sJet Airways is eyeing a bid for the soon-to-be privatised national carrier, according to a Press Trust of India report published in Mint newspaper. That would consolidate the country's long-haul market, but Jet would need serious financial help. Abu Dhabi's Etihad may have to make room for a new large strategic investor.
Jet is already highly leveraged, a legacy from its decision to offer long-haul routes before there was ample demand. Competition from budget rivals has hurt too. Despite cost cutting, net debt remains around 7 times reported EBITDA. Recapitalisation is critical, says Kapil Kaul of the Centre for Aviation, a consultancy.
A bid in partnership with Air France-KLM and U.S.-based Delta Airlines, as mooted by Press Trust, would spread the burden. However, Air France already has a cooperation agreement with Jet, so it would stand to gain little from such a deal. As for Delta, Chief Executive Edward Bastian says the airline is not planning such an investment.
But there is a decent case for Etihad to sell its 24 percent stake in Jet. Abu Dhabi's flagship airline appears to be in retrenchment and has began to cut ties or sell some of its minority stakes in struggling rival airlines. Although the investment in Jet still holds value for the tiny emirate, connecting its Gulf airport to a population of 1.3 billion potential travellers, Jet's new alliances significantly erode that advantage.
20/03/18 Una Galani/Nasdaq
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Jet is already highly leveraged, a legacy from its decision to offer long-haul routes before there was ample demand. Competition from budget rivals has hurt too. Despite cost cutting, net debt remains around 7 times reported EBITDA. Recapitalisation is critical, says Kapil Kaul of the Centre for Aviation, a consultancy.
A bid in partnership with Air France-KLM and U.S.-based Delta Airlines, as mooted by Press Trust, would spread the burden. However, Air France already has a cooperation agreement with Jet, so it would stand to gain little from such a deal. As for Delta, Chief Executive Edward Bastian says the airline is not planning such an investment.
But there is a decent case for Etihad to sell its 24 percent stake in Jet. Abu Dhabi's flagship airline appears to be in retrenchment and has began to cut ties or sell some of its minority stakes in struggling rival airlines. Although the investment in Jet still holds value for the tiny emirate, connecting its Gulf airport to a population of 1.3 billion potential travellers, Jet's new alliances significantly erode that advantage.
20/03/18 Una Galani/Nasdaq
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