Is Jet going the Kingfisher way?

[vivek1989]

After KF went down, it took a lot of time for the job market to recover. What happens if Jet goes bankrupt? It employs almost twice as many pilots than kingfisher did during its time. The effects on the job market will be massive, isn't it? Any inputs?

Just when you start thinking that things cannot get any worse than present, we get news like this!!! What has gone wrong with the aviation industry?

Jet Airways posts worst quarterly loss of Rs 891 crore - The Times of India (http://timesofindia.indiatimes.com/business/india-business/Jet-Airways-posts-worst-quarterly-loss-of-Rs-891-crore/articleshow/24608943.cms)

Jet Airways posts worst quarterly loss of Rs 891 crore

NEW DELHI: Jet Airways, in which Abu Dhabi's Etihad is buying a stake, reported its worst quarterly loss on record as carriers in Asia's third-biggest economy battle high fuel costs and taxes.

Mumbai-based Jet, India's second-biggest carrier by domestic market share, reported a net loss of Rs 8.91 billion for the fiscal second quarter to September 30, compared with a net loss of Rs 997 million in the same period a year earlier.

Jet has won the cabinet's approvals to sell a 24 per cent stake to Etihad for about $334 million, but is yet to complete the deal as it awaits other approvals.

[vivek1989]

Jet Airways is showing the same signs as Kingfisher did before it went under viz. reporting massive losses, defaulting on payments to AAI, scampering for external funding, etc.

Meanwhile Spicejet has been put on a cash-and-carry basis by oil companies after it failed to bring its credit within limit, something that also happened to KF a few months before it disappeared.

Jet Airways seeks new deadline for Rs 100-cr payment - Business Today (http://businesstoday.intoday.in/story/jet-airways-seeks-new-deadline-for-airport-fees-payment/1/199882.html)

Jet Airways seeks new deadline for Rs 100-cr payment

Cash-strapped Jet Airways has defaulted on payment of over Rs 100 crore as airport fees and has requested the civil aviation ministry and the Airports Authority of India (AAI) to extend the deadline payment to March 31, 2014.

The Naresh Goyal-led airline has written to the ministry and the AAI to also relax the one- month additional security deposit of Rs 60 crore for defaulting on payment for availing airport services.

AAI had warned Jet in August to keep its dues within the bank guarantee limit or otherwise it would be refused credit.

SpiceJet has already been put on a cashand- carry basis from August 30 after its dues surpassed the limit of its bank guarantee.

Jet's spokesperson said, " We have requested the government that the security deposit should continue to be at one month average billings sighting current economic scenario namely the devaluation of the rupee versus the US dollar, steep increase in landing and navigation charges at key metros and high fuel prices." The airline, however, claims that " this is in no way a reflection of airline's financial position." Jet, which is in the process of securing approval to enlist Abu Dhabi's Etihad Airways as a significant minority investor, reported a net loss of Rs 355 crore for the April- June quarter of this fiscal as against net profit of Rs 24.7 crore in the year- ago period. Revenue for the quarter declined 12.4 per cent to Rs 4,064 crore from Rs 4,636 crore in the same quarter last year.

The denial of credit by AAI has an adverse impact on airlines as they have to pay in hard cash for air traffic services across domestic airports, including the private metro ones.

The AAI also charges penal interest on delay in settlement of these bills. In cases where delay persists, the security amount is encashed and the defaulting airlines is put on a cash- and- carry basis.

AAI's dues have been mounting with the airlines getting impacted by the economic slowdown. As on March 31, state- run Air India and its subsidiaries owed Rs 1,539.75 crore to AAI while Jet owed Rs 100.16 crore, SpiceJet Rs 80.17 crore, IndiGo Rs 2.89crore, GoAir Rs 8.71 crore while defunct Kingfisher Airlines, led by Vijay Mallya, owed Rs 186.26 crore to AAI.

[aditya104]

Jet Airways has suffered badly in FY 2013. This year too isn't any better.As of now the net worth is negative and the company has massive debt on its books. But this year should see issue of share capital to Etihad and this rules out a possibility of another Kingfisher like fiasco for the time-being.

The interest expense has taken a big toll. In the last 5 years, the interest coverage ratio has been less than 1 (http://money.livemint.com/IID64/F132617/Financial/Ratios/Company.aspx) in all the years except 2011. The interest coverage ratio (http://www.investopedia.com/terms/i/interestcoverageratio.asp) is used to determine how easily a company can pay interest on outstanding debt. The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses.

Overall, due to a weak rupee and high fuel costs FY 14 is expected to be similar to FY 13. A turnaround can now only be hoped for in FY 15 and a lot depends on external factors such as fuel costs.