Indian Airlines Jet Airways

Jet Airways, India's oldest privately owned carrier, will consider tendering for Air India. As soon as we have more clarification, we will have an opinion," said Vinay Dube, CEO of Jet Airways, ET Online on the fringes of an upcoming meeting in the German capitol over the past two weeks when asked if the carrier was considering an offer.

In the next few weeks, the Indian authorities are likely to announce the main features of the privatization of Air India. It is the first official declaration by Mumbai-based Jet Airways that it could visit Air India, apart from its declared location on the back of the arriving new Boeing 737 MAX aircraft.

Air India, a state-owned company with a total of 140 aircraft, 43 of which are own Airbus A320s and 15 own Boeing 777s, which can operate non-stop in the USA... ... As soon as we have more clarification, we will have an opinion," said Vinay Dube, CEO of Jet Airways, ET Online on the fringes of an upcoming meeting in the German capitol over the past two weeks when asked if the company was considering an offer.

In the next few weeks, the Indian authorities are likely to announce the main features of the privatization of Air India. It is the first official declaration by Mumbai-based Jet Airways that it could visit Air India, apart from its declared location on the back of the arriving new Boeing 737 MAX aircraft.

Air India, the state-owned Air India, with a total of 140 aircraft in its own portfolio, 43 of which are Airbus A320s and 15 Boeing 777s, which can operate non-stop to the USA and Europe, has 13% of the national and 17% of the global aircraft markets. Jet has taken a close look at Air India, said one individual conscious of the issue who refused to be mentioned, and the airline's top-brass has had informal discussions with a Indian finance industry boyfriend on the issue and is also considering tightening its finance.

It could be Jet's second try to buy a competing carrier in just over a decade despite a poor record. In 2007, Naresh Goyal-led Jet purchased through Air Sahara for Rupees 1,450 in 2007 - an asset deal that worsened its financial condition, acidified its working relationships and drew it into a protracted legal dispute with the Sahara Group over the real cost of the buy-out.

Meanwhile, Air Sahara has been rebranded JetLite and most of its activities have been amalgamated with the major Jet Airways family. Concerning Air India, the administration is likely to outsource the non-sustainable part of the airline's 50,000 rupee debts, and together with its strong 25,000 rupee per annum income (with a significant US dollar-denominated income) this will be attractive to many applicants.

An aeronautical analysis expert, who did not want to be mentioned, assessed that the carrier could have a value of 25,000 to 40,000 US dollars according to the conditions proposed by the federal authorities, which included those relating to debts and the futures of its people. However, most Indian airlines do not have a sufficiently solid track record to offer for Air India.

Jet, for example, had a net loss of 4,900 rubles from March 2017 and free liquidity of about 500 rubles from September 2017, according to the rating firm IRA. In order to be honest, the authorities are already considering giving airlines with net assets in the red the opportunity to offer for Air India.

Financing such an acqusition through borrowed capital will be tricky and will require shareholders' capital. Jet, which had a Rs12,600crore indebtedness in March 2008, peaked at Rs16,900crore by 2009. In March 2010, its net asset value of 1,450 rubles in March 2008 was converted into a net asset value of 85 rubles in March 2010.

At the end of March 2017, the airline's indebtedness was Rs12,800crore. Therefore, the pivotal issue is how Jet will handle the resource to finance a Air India Buyout. "Steve Forte, former CEO of New York-based Jet Airways, said, "Where did Mr. Goyal get the cash to buy Gulf Air in the 1990s?

" In fact, in 1997, when the Goyal administration abruptly amended the regulations governing investments in overseas airlines, Gulf Air and Kuwait Airways quickly acquired a 40% interest in Jet Airways. Once again, Goyal can rely on either global or domestic partnership to provide for Air India.