Etihad Conditions Cloud Jet Rescue Mission
It’s not clear if Jet’s overseas lenders HSBC Dubai and Mashreq will provide further credit to the troubled airline and join any plan to revive it Talks stuck as Gulf partner is against pledging shares and wants Goyal divested of decision-making powers
Accumulated loss (Figures in crore) Net worth Net Debt Other conditions include slashing Naresh Goyal’s shareholding to around from and stripping him of decision-making powers
Anirban Chowdhury & Sugata Ghosh
Mumbai: Talks among Jet Airways, its lenders and partner Etihad Airways over a possible rescue are stuck over several stipulations by the Gulf carrier for making any further investment, particularly that it won’t pledge its shares as collateral against loans to the Indian carrier, said two people aware of the matter.
Etihad currently owns 24% of Jet, which has asked the Abu Dhabi carrier to put in more money by way of additional equity. Banks have refused any liquidity assistance for Jet until it gets equity funding from existing shareholders. Repayment obligations till FY21:
Market cap as on Friday: Stock price erosion in 12 months:
13,000 9,768 8,000 6,000 2,880
Other Etihad conditions include slashing founder-chairman Naresh Goyal’s shareholding to around 22% from 51% and stripping him of decision-making powers. Jet’s Indian lenders will extend additional debt of twice the amount that Etihad invests as equity, sources said.
It’s not clear if HSBC Dubai and Mashreq, overseas lenders to Jet, will provide further credit and join any plan to revive Jet. The two currently enjoy guarantees from Etihad for some of their exposure.
When contacted, Etihad and Jet declined to respond to what they termed as ‘speculation’.
Etihad’s conditions will likely delay a bailout. India’s second-biggest airline by market share is facing the worst financial crisis in its 25-year existence, strapped for cash, laden with losses and debt.
Jet defaulted on loan repayments in December, delayed employee salaries throughout last year and failed to pay aircraft lessors in time.
India’s smartphone market almost doubled to 150 million units in 2018 from about 80 million in 2014. Comparatively, Apple’s shipments have risen to 1.6-1.7 million now — a market share of about 1.2% — compared with 1.5 million in 2014, according to Counterpoint.
Analysts said the slump in 2018 can be attributed to intense competition and the $1,000 price tags of the new iPhone models, which failed to attract buyers even after offering EMI schemes, zero down-payment and cashback plans. Some offers on older models such as iPhone 8 and 8 Plus also didn’t work, said analysts.
India added to Apple’s problems across the globe in 2018, specifically slowing economic growth in China, due to which the company lowered its revenue forecast for its fiscal first quarter ended December 29 to $84 billion. In November, it had pegged first-quarter revenue at between $89 billion and $93 billion.
Apple declined to comment to ET’s emailed queries.
Apple’s India business grew from $100-200 million a few years ago to over $2 billion in 2016 and flattened out after that, Apple CEO Tim Cook said in an interview to CNBC last week.
Apple still considers India an important market and has “more work to do,” Cook said in the interview, adding that it wants to get bet- ter results in the future. The Cupertino-based company wants to open its own stores in India and would like duties on its products to be cut.
“For Apple, 2018 has been a disastrous year in India… while Apple is still the favoured aspirational brand in India, it has definitely slipped. In comparison, the Android smartphone market in India is one that is thriving and full of innovation,” said Prabhu Ram, head-industry intelligence group at CyberMedia Research.
CMR anticipates an almost 45% decline on year in iPhone shipments in Q4 2018 and shipments of 2 million units for the full calendar year.
Counterpoint’s Shah said the stickiness factor for iPhones is reducing fast because phones have become a commodity.
“Chinese brands have 3040% cheaper pricing than Apple. It doesn’t make sense to pay sky-high prices for a product that doesn’t have new features,” he said, adding that iPhones won’t even support 5G until 2020.
The prices of iPhones are shrinking its potential base, even among existing users who are due to replace their devices, according to techARC analyst Faisal Kawoosa.
Media reports said Apple may assemble its top-end iPhones in India through the local unit of Foxconn Technology Co. this year, a move that could result in cost savings that can be passed on to consumers.