Jet Airways suspended operations just over a year ago, but that doesn’t mean the airline is out of the news. Since then, the airline has been actively seeking investors in the hopes that it can pay its debts and fly again. So what does the future hold for Jet Airways in these uncertain times?
Many ‘potential investors’ but no actual investments
The last year has seen many possible investors show interest in the airline, meet with airline officials, but fall short of actually making an offer. This has become a cycle we have seen numerous times with several investors. There have been many reasons for this, such a lack of clarity on Jet’s airport slots, demand for further debt reduction, or simply not seeing enough value in the deal.
Jet Airways has accumulated a shocking $2.96bn in liabilities, making any deal difficult. Lenders are willing to take a substantial haircut on this debt, but even a fraction of this amount will be a lot for investors. This debt alone has scared off many investors from even considering the airline, many of whom are looking at Air India instead, which is also up for privatization and is a far less risky investment.
Who is still looking at investing in Jet Airways?
Etihad was considered a front-runner for investing in Jet Airways, due to its previous 24% acquisition in the airline. However, the Abu Dhabi-based carrier decided not to invest due to its own financial situation. This opened the door to a number of new companies possibly jumping in.
We saw the Hinduja Group, a conglomerate holding company, showing interest in the airline. After much deliberation and media attention, the group decided to step away from the deal. This meant Jet now had no deep-pocketed investors wanting to bail out the airline. The airline saw bids from a Latin American Synergy Group, by-far the most committed bidders, the Far East Development Fund, a Russian-back investment firm (which had plans to merge the airline with Aeroflot and introduce the Sukhoi Superjet 100), and more.
All the bids filed never amounted to an actual resolution plan from any of the potential investors. Jet Airways’ creditors have repeatedly extended the deadline for bids, even after three rounds of bidding. Many expected the airline to be declared bankrupt earlier this year when no bidder submitted a plan, but the creditors extended the deadline once again. It is interesting to note that bidders may not receive many tangible assets from the deal.
At this point, it seems the creditors are simply praying for possible investments. With the coronavirus bringing global aviation to a halt, it seems impossible that anyone would look to invest in a grounded airline with billions in debt. Barring a miracle, it seems the Jet Airways story has come to an end.