Two news items hit the Jet Airways stock on December 17, resulting in its share price falling nearly 4 percent, on a day when the market was up. The first news was that SBI, the lead banker for Jet Airways, had ordered a forensic audit of the company’s books for the period between April 1, 2014, and March 31, 2018.
Any banker ordering a forensic audit on a company is not good news since the impression it gives is that the bank suspects something. Why else should it not trust the books of accounts? In the case of Jet Airways, it is even more intriguing as the chosen period of 2014-2018 is right after Etihad invested over Rs 2,000 crore for a 24 percent stake in the company in 2013.
Some bankers have been quoted as saying ordering a forensic audit on the company is merely a procedural matter as Jet Airways has approached the banks for a restructuring of its loans. If that is indeed the case and the banks are seriously considering restructuring Jet’s loan then it is good news for the company that is struggling to keep afloat.
The money and more importantly the business which came in with Eithad was good enough for Jet Airways to survive for a few years. But a big reason for its survival was the low oil prices prevailing at the time. As soon as oil prices started rising, Jet was back in trouble.
There have been reports of Jet Airways not paying salaries on time, cutting unviable routes and moving towards a no-frills airline by stopping free meals. Jet Airways had earlier said it intends to cut its operating cost by Rs 2,000 crore over the next two years.
17/12/18 Shishir Asthana/Moneycontrol.com
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Any banker ordering a forensic audit on a company is not good news since the impression it gives is that the bank suspects something. Why else should it not trust the books of accounts? In the case of Jet Airways, it is even more intriguing as the chosen period of 2014-2018 is right after Etihad invested over Rs 2,000 crore for a 24 percent stake in the company in 2013.
Some bankers have been quoted as saying ordering a forensic audit on the company is merely a procedural matter as Jet Airways has approached the banks for a restructuring of its loans. If that is indeed the case and the banks are seriously considering restructuring Jet’s loan then it is good news for the company that is struggling to keep afloat.
The money and more importantly the business which came in with Eithad was good enough for Jet Airways to survive for a few years. But a big reason for its survival was the low oil prices prevailing at the time. As soon as oil prices started rising, Jet was back in trouble.
There have been reports of Jet Airways not paying salaries on time, cutting unviable routes and moving towards a no-frills airline by stopping free meals. Jet Airways had earlier said it intends to cut its operating cost by Rs 2,000 crore over the next two years.
17/12/18 Shishir Asthana/Moneycontrol.com
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