Grounded Jet shares sink, rivals eye airport slots

mumbai/bengaluru — Jet Airways shares plunged on Thursday, battered by worries about whether the grounded Indian airline would fly again, while carriers such as SpiceJet rushed in to plug a supply gap in the wake of their rival’s demise.

Once India’s largest private airline, Jet halted all flight operations indefinitely on Wednesday evening after lenders led by the State Bank of India declined to extend more funds to keep the carrier going.

Investors punished Jet shares on Thursday, driving them down 34 per cent in their biggest intraday fall. The company is worth about $260 million now, versus $1.6 billion at its peak in 2005.

The carrier, saddled with roughly $1.2 billion of bank debt, has been teetering for weeks after failing to receive a stop-gap loan of about $217 million from its lenders, as part of a rescue deal agreed in late March.

While lenders are “reasonably hopeful” a bidding process for an up to 75 per cent stake in the airline will end successfully, investors — according to Shukor Yusof, the head of aviation consultancy Endau Analytics — have doubts over whether a successful deal will be completed.

Jet’s “value is dwindling with each passing day”, he said.

However, the crisis at Jet, long the biggest operator in Mumbai, has opened a window of opportunity for other airlines.

“Rivals are looting available slots because of Jet’s shutdown,” Edelweiss Securities analyst Vijayant Gupta said.

Meanwhile, the Indian government plans to form a committee to temporarily allocate takeoff and landing slots left vacant by the grounding of Jet Airways flights, a senior official said, a day after the indebted carrier was forced to stop operations.

The vacant slots will be allocated to other airlines, said Pradeep Singh Kharola, India’s aviation secretary, at a press conference in New Delhi.

At least 280 slots were vacant in Mumbai and 160 in Delhi, he said, after Jet Airways — once India’s largest private carrier — ended all operations on Wednesday evening after failing to secure further loans from lenders.

Airlines are in touch with lenders to lease grounded Jet Airways planes, which are likely to be taken up by local airlines including state-run Air India, which is also in talks with lenders, Kharola said.

A bidding process is underway for a stake of up to 75 per cent in Jet Airways. Kharola said there is “keen interest” from bidders. Top bosses of airlines have assured they will keep fares at reasonable levels, he added. —