Jet Airways’ Turnaround Is Feasible, Says CAPA India’s Kapil Kaul
Jet Airways (India) Ltd.’s bank-led turnaround is feasible and it could happen in the next 12 to 24 months, according to Center for Asia Pacific Aviation.
The board of debt-laden carrier on Thursday agreed to give lenders a majority stake as part of a provisional resolution plan. “The expectation that it would be a bank-led restructuring was perhaps the only option. I don’t think there was any other option at this stage,” Kapil Kaul, chief executive officer of the Indian Subcontinent and Middle East at CAPA India told BloombergQuint in an interaction. “The bank-led restructuring would give Jet Airways time to look for a change of board or governance and to add more people to the top.”
I believe they [Jet Airways] have the ability to restructure their cost significantly and there is a possibility of improved revenues as well.Kapil Kaul, CEO-Indian Subcontinent and Middle East, CAPA India
Kaul, however, expects the proposed resolution plan to be an interim one. “Our expectation is that the lead taken by the banks is limited. We don’t see them holding the airline for long,” he said, adding it is an interim arrangement before a new ownership order emerges. “For the interim, it is the best rescue package that could have been structured.”
The cash-strapped full-service airline, which reported a loss for the fourth straight quarter yesterday, approved a bank-led provisional resolution programme by State Bank of India, its biggest lender. The plan estimates a funding gap of roughly Rs 8,500 crore, which is to be met by an “appropriate mix of equity infusion, debt restructuring, sale, lease back or refinancing of aircraft, among other options.”
“If the funding of about Rs 8,500 crore is realised, it will give them an opportunity to turnaround...and a about couple of years to move ahead,” Kaul said.
Watch the full interaction here: