Saturday, August 11, 2018

Jet Airways loses sky to budget carriers IndiGo, SpiceJet; heads towards worst year since 2011

Jet Airways India Ltd. was once at the forefront of India’s rapidly growing market for air travel, but a challenge from budget carriers and surging fuel prices are backing the airline into a corner. Shares of the carrier, part-owned by Etihad Airways PJSC, plunged as much as 15 percent Friday in Mumbai after the company postponed announcing its first-quarter earnings, less than a week after denying a report that it needs drastic measures to cut costs and bolster its finances. The stock is headed for its worst year since 2011 as Jet Airways’s finances deteriorated and the default risk on its debt obligations increased.

Budget airlines such as IndiGo, GoAir and SpiceJet expanded exponentially in the past decade, giving first-time flyers a new opportunity and middle-class families an alternative to full-service carriers that offered lounges and free meals on board. India, the world’s fastest-growing major aviation market, is also one of the toughest in which to survive, with premium carrier Kingfisher Airlines collapsing and legacy Air India needing repeated state bailouts as ultra-low fares fail to cover their costs.

“Jet Airways is facing challenges on all fronts,” Bloomberg Intelligence’s Singapore-based analyst Rahul Kapoor said. “The rise in oil prices is having a double whammy on their earnings. They already have a sparse balance sheet compared with other Indian carriers.”
10/08/18 Bloomberg/Financial Express