Naresh Goyal Archives - Stocksbaazigar

Jet Airways Crisis worsens

20th April 201920th April 2019 by stocksbaazigar

Stocksbaazigar discussed Jet Airways Crisis in detail in November 2018 in the post Jet Airways Crisis explained. It was predicted then that deal with Tata Group won’t materialize as the Founder Naresh Goyal wasn’t ready to cease his control over the aviation company which he started in 1993. Jet Airways has the second largest Market share in India after Indigo in the Aviation sector. Naresh Goyal is a pioneer of Private Aviation industry in India. In 1992 when the Government of India accepted the Liberalization, Privatization and Globalization reforms under P. V. Narasimha Rao Government, he was the first to take a leap of faith with the incorporation of Jet Airways in 1993 which became fully functional airlines in 1995. Jet Airways served 26 years to Indian and Foreign Customers before all its flights getting grounded recently. We have already discussed all the reasons for this Financial crisis in the above-mentioned post. Now, let’s analyze the current situation of Jet Airways. Naresh Goyal and his wife stepped down Founder Naresh Goyal has 51% stake in Jet Airways which he founded in 1993. He and his wife Anita Goyal agreed to step down from the board of Jet Airways after their board meeting on 25th March. Etihad Airways which owns a 24% stake in the company also decided to step down. Employees of Jet Airways and all the experts in the Aviation industry blamed Naresh Goyal for not taking timely actions and made him cease the Chairmanship of the company. Jet Airways grounded all its flights The Interim Management set up to monitor the situation decided to halt its all operations and grounded all its flights after unpleasant situations like Strike by Pilots, Protests by Employees, etc. after intervention by Government. It is clear that Government has a soft-corner for Jet Airways which is saddled with more than $ 1 bn debt and may face the fate of Kingfisher Airlines very soon. But they won’t take any action now thanks to the Loksabha Elections 2019. Supreme Court questioning the forceful control of Jet Airways by lenders to find new Buyers for it as per the Revival Plan has also created the panic in the market. Jet Airways Shareholders are worried Kingfisher Airlines has a similar script like Jet Airways. KFA acquired Air Deccan and its problems started. Jet Airways took over Air Sahara and its problem started. The debts started increasing thanks to increasing ATF. This lead to erosion of the valuation of Jet Airways significantly. We saw stock price touching 158 last weak which is a big concern for all the 1,58,000 Retail shareholders who are stuck in it. Only five Mutual Funds has some exposure in Jet Airways but they were smart enough to reduce their exposure significantly over the quarters. Indigo and SpiceJet were preferred over Jet Airways by them which saved them. Vijay Mallya took a dig at Government Kingfisher Airlines Ltd and Jet Airways Ltd both served premium clients and had healthy rivalry before former Airline went bankrupt and willful defaulter Vijay Mallya ran away from India. When the ‘Revival plan’ of Jet Airways came out, Mallya couldn’t stop himself from showing his anger on Government. In a series of tweets, he targeted both Government and Jet Airways. He claimed that he could have saved KingFisher Airlines easily if Government had bailed out it the way they are planning to bail out Jet Airways. He may be right about the partiality Government is doing in this case but people are aware that Vijay Mallya is ‘Bhagoda’ while Naresh Goyal did not run away from the situation. Goyal neither diluted his stake in JetAirways nor stopped his attempts to find a Buyer who can save Jet Airways. He was ready to reduce his stake from 51% to 15% in the possibility of Win-Win deal with potential buyers. Customers react to JetAirways Crisis Frequent travelers of Jet Airways are really upset to see the ongoing development in Jet Airways Ltd. They showed solidarity to the employees of Jet Airways who served them for so many years. They are really optimistic about the survival of Jet Airways. Not all customers are that loyal. Many customers of Jet Airways faced inconvenience when flights were canceled on last minutes and they didn’t get refunds of the same. They showed their anger on Social Media. Travelers who pre-booked seats in Jet Airways for their summer vacation went to Andheri office for their refunds but they were requested to cancel the tickets through the platform they booked the tickets. It is said that those who booked tickets directly using Website and App of JetAirways will get a refund within 7 days. But those who booked tickets through agents have to wait for an indefinite time. Jet Airways stopped its operations on 17th April 2019 which created a great vacuum in the sector. The airfare tickets are skyrocketing by almost twice the price. Low fare No-frills airlines are getting benefited by Jet Airways Crisis. Unfortunately, premium clients who travel by Jet Airways rather than low-cost airlines only for the good experience of traveling are missing Jet Airways the most. Jet Airways Employees seek President’s intervention for salary dues. Jet Airways Pilots didn’t receive their salary for 3 months. Other staff didn’t get a salary for last month while Executive level employees have not got any salary from last 7 months. Aviation Minister Suresh Prabhu and DGCA Chief both raised their hands by saying that Jet Airways Ltd being Private Airlines, they must seek clarification from the Interim Management of Jet Airways about their Salaries. Govt itself facing problem to run Air India which has more debts than Jet Airways and 76% disinvestment plan in it has been postponed due to some unavoidable reasons. Jet Airways Employees have decided to approach Prime Minister Narendra Modi and President Ram Nath Kovind to seek their intervention for their salary dues. They are desperate now as they don’t have any guarantee of their jobs nor money to … Read more

Jet Airways Financial Crisis Explained

3rd February 201927th November 2018 by stocksbaazigar

Is Jet Airways the next KingFisher Airlines? Can Tata Group really acquire control of JetAirways? Will Naresh Goyal cede his control? Will Etihad buy more stake of JetAirways? What role will Government Play? What should an Investor of Jet Airways do? Is it safe to trade in such a volatile stock? Let’s discuss the current Financial Crisis in Jet Airways in detail in this post. Current Updates: On 26th Nov. 2018 Jet Airways handed over pink slips to 16 more employees. Last month it laid off 20 employees. Jet Airways is rationalizing the human resource for the cost-cutting purpose. They have been delaying Salaries of employees from last few months. September Salary dues will be paid to employees on 5th December 2018. Jet Airways has around 16000 employees and more lay-off is possible in near future. What is the Crisis all about? Recently, one of the leading Newspaper claimed that Jet Airways has left with only 60 days of funds for carrying out its Operations. On the same day, Management of JetAirways denied this News and ensured the Investors that Jet Airways posted losses for 3 consecutive quarters and it is definitely facing a Financial crisis due to increasing Aviation Fuel prices and depreciating Rupee but Management of JetAirways is taking all the right steps to overcome the Financial Crisis. Effect on Share Price of Jet Airways: 52-week high of Jet Airways was 883.65 and a 52-week low was 163. Clearly, when Brent Crude Oil price rallied from 45 to 87 Jet Airways stock price fell from 883.65 to 163. From 3rd Oct 2018, Brent Oil started correcting again which resulted in some delivery based buying in JetAirways. When the stock was trading near 220, the Speculation that Delta Airways will buy 24% stake from Etihad in Jet Airways and Tata Group too will buy Majority stake from Naresh Goyal created a buzz in the Market. The stock reached 280 within no time. On the previous day of Tata Group’s Management Meeting stock rose by 25% in a single day and more 8% rise took Jet Airways to 346 on next day (16th Nov 2018). After the Market hours. Jet Airways released a press note in which it clarified that any such news of Tata Group buying Jet Airways is only a Speculation and only preliminary discussion is going on. Profit booking dragged Jet Airways down after that. But for few days it managed to hold SL of 300 intact. On 26th November 2017 stock broke the resistance of 300 as Market came to know that Naresh Goyal is not ready to cede its control in JetAirways and looking for more cash from its old Stakeholder Etihad Airways for its Operations. Why Tata Group deal isn’t materializing? Founder Naresh Goyal and his wife have 51% stake in Jet Airways. Etihad Airways own 24% stake in Jet Airways. Rest 25% of shares are held by minority shareholders and retail investors. Tata Group owns AirAsia and Vistara Airlines which is a joint venture with Singapore Airlines. Tata wanted to buy out entire 51% of Naresh Goyal to acquire the Jet Airways which can make them second largest Airline in India after Indigo. But Naresh Goyal was ready to dilute his equity to as low as 15%. This meant that Tata Group should give profitable exit to Etihad by buying their 24% to reach the magic figure of 51%. The government wanted Tata to help Jet Airways in this Crisis as they themselves can’t bailout Private Airlines and crash of Jet Airways is not good for Customers as well as 16000 employees of Jet Airways. What steps did Goyal take after Tata Group – Jet Airways deal didn’t Materialize? Naresh Goyal and his team met Tony Douglas, Group CEO of Etihad Airlines last Sunday. Goyal offered to dilute his equity from 51% to as low as 15% and requested Etihad to double its stake in Jet Airways in exchange of Cash Infusion. Naresh Goyal prefers dealing with Etihad than accepting the deal offered by Tata Group. This way Etihad Airlines may hold as high as 49% in Jet Airways in the coming future depending on how much Cash they will infuse in the beleaguered Jet Airways. This is not the first time Aviation sector facing Financial Crisis. In India, we saw consolidation in this sector since 2010. Kingfisher Airlines closed its operation in 2012. Since then Jet Airways is handling 17.8% passenger market share with its fleet size of 124 which serves 67 destinations across the world. What to do in Jet Airways shares now? The rally in stock was due to Speculation that Tata Group will acquire Jet Airways. But now as we all know that Naresh Goyal is taking help of Etihad to revive debt-ridden Jet Airways, the stock has started to cool off. We may see stock falling up to levels of 240-260 again this week. The fundamentals of Jet Airways company are really bad and this stock is no more an Investment bet. High-risk traders can trade in stock but Stop Loss of the Stock can be as deep as 240 which doesn’t make any sense to trade in stock. I would suggest you, stay away from this stock for now. Indigo is always a better option if you want to invest in the Aviation sector. Disclaimer: This post is for Educational Purpose. Stocksbaazigar Mr. Deepak Doddamani is NSE’s Certified Investment Analysis Professional and NSE’s Certified Marketing Professional level – 4. He is not SEBI registered Financial Advisor. Please consult your Advisor before taking any Investment related decisions. Thank you. Video explanation on Jet Airways crisis.