New Delhi, Jan 16
Shares of Jet Airways came under selling pressure Wednesday and crashed nearly 8 per cent amid uncertainty over the revival plan of the company.
The stock shed 7.95 per cent to close at Rs 271 on BSE. Intraday, it touched Rs 266.05- down 9.6%.
On NSE, shares of the company shed 7.47 per cent to end at Rs 271.75.
In terms of equity volume, 36.28 lakh shares of the company changed hands on BSE and over 4 crore shares were traded on NSE during the day.
Etihad Airways, which owns 24 per cent of Jet, views the current situation of the airline as “precarious” and states that Jet Airways needs emergency funding. Due to mismanagement and incompetence the number 2 air carrier of India is fast becoming a liability. Despite an encouraging market, Jet’s management failed to develop a comprehensive long term sustainable strategic business plan to turn the carrier into a profitable entity and revive its past glory. Jet’s staff- pilots, engineers and technicians – are regarded as the best in the industry and they needed only ownership to harmonize their energies. Yet, Jet’s management failed miserably on this count.
Thus, Etihad Airways has offered to invest in debt-laden Indian carrier Jet Airways Ltd at Rs 150 per share, along with an immediate release of $35 million so that some short-term measures can be taken to ensure its smooth functioning provided certain conditions are met.
This is at a whopping 49 per cent discount to Jet’s closing price of Rs 293.70 on Tuesday. That’s why Jet Airways shares dived south soon after the report, falling as much as 7.5 per cent to Rs 271.75 – the biggest intra-day percentage loss since December 10, 2018.
In case Etihad increases the stake in Jet Airways, it may have to make an open offer. Hence Etihad has sought an exemption from SEBI on preference pricing and open offer guidelines. Under market regulator norms, entities have to make an open offer in case their shareholding in listed companies goes beyond a certain threshold.
Etihad Chief Executive Tony Douglas has written to State Bank of India on the restructuring plan for Jet Airways.
Etihad’s conditions for Jet’s bailout are: exemption from the market regulator on preference pricing and open offer guidelines, besides Jet’s founder and Chairman Naresh Goyal to step down from the board and his stake be slashed to 22 per cent from 51 per cent.
The revival of the airlines’ past glory was a daunting task and as such it needs full backing of the Ministry for Aviation to turns its fortunes. Amid concerns over the financial health of Jet Airways, the Civil Aviation Ministry on Wednesday expressed hope that the airline, its strategic partner Etihad and lenders reach a “common plan” to deal with the situation. The government hopes that the three — Jet Airways, Etihad and the lenders — come together and decide on a common plan to chart the way forward.
Crisis-hit Jet Airways Wednesday said State Bank of India, along with other lenders and stakeholders, is working on a comprehensive resolution plan to turnaround the airline.
“We wish to clarify that the resolution plan is presently under active discussion amongst the stakeholders and the various options therein, being privileged and confidential, are yet to be crystallised and agreed to by the stakeholders in the best interests of the company,” it said.