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Jet Airways – Will it become the Next Kingfisher?? A Tale of a cash strapped airline…

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In recent past jet airways is in lots of talks. Stock is currently trading at 297.95 +3.55 (+1.21%). In the last 5 days stock is gone up more than 25 percent.
But does that make it a good bet??  Is it the right time to invest in Jet Airways??
We will cater to all such questions only after an elaborated understanding of the company….


History of Jet Airways:

Jet Airways is a major Indian international airline based in Mumbai. In October 2017, it is the second-largest airline in India after Indigo with a 15.4% passenger market share. It operates flights to 67 destinations from its main hub at Chhatrapati Shivaji International Airport and secondary hubs at Indira Gandhi International Airport and Kempegowda International Airport. Incorporated in April 1992 as a limited liability company, the airline began operations as an air taxi operator in 1993. It began full-fledged operations in 1995 with international flights added in 2004. The airline went public in 2005 and in 2007, it acquired Air Sahara.

Financials of Jet Airways:

Jet Airways is posting consecutive losses from FY-2009-2010 to FY 2014-2015. It posted a profit for the first time in FY-2015-16 in wake of falling crude prices in the international market.

Particulars
2010
2011
2012
2013
2014
2015
2016
2017
122.3
147.2
170.6
174
177.1
202.8
229
236.7
16.4
17.3
14.2
4.8
36.7
18.1
11.7
4.4
Departures
131,108
146,876
175,646
169,254
173,723
176,406
202,816
202,265
Number of passengers (mn)
12
14.6
17.3
16.8
17.2
19.4
23.4
24.4
Load Factor (%)
77.4
78.6
79.3
78.8
78.2
82.4
82.6
81.4
Number of aircraft (at year end)
86
97
102
95
101
107
116
113

Airline companies uses ATF (Aviation Turbine Fuel) to fuel its flights. It is a derivate of Crude Oil. As ATF (Aviation Turbine Fuel) constitutes major portion (i.e. 37%) of Total Cost of Airline Companies, a drastic drop in International Crude Oil prices aided Jet Airways. Brent Crude oil has fallen from its all-time high of $110.80 per barrel to its all-time low of $ 37.28 per barrel in 2015 helping cash strapped airline turn profitable in FY-2015-2016 for first time since 2010.


Brent Crude - Historical Annual Data
Year
Average
Year Open
Year High
Year Low
Year Close
Closing Price
2019
$55.01
$54.06
$57.10
$53.23
$57.10
2018
$71.34
$66.65
$86.07
$50.57
$50.57
2017
$54.71
$56.82
$66.80
$44.82
$66.73
2016
$45.13
$37.22
$56.82
$27.88
$56.82
2015
$53.03
$55.38
$66.33
$36.11
$37.28
2014
$98.97
$107.94
$115.19
$55.27
$55.27
2013
$108.56
$112.98
$118.90
$96.84
$109.95
2012
$111.57
$111.12
$128.14
$88.69
$110.80
2011
$111.26
$95.82
$126.64
$93.52
$108.09
2010
$79.61
$79.05
$93.63
$67.18
$93.23



Shareholding Pattern of Jet Airways:-

Majority of shares are held by Naresh Goyal (51%) which is currently serving as Chairman of the airline.

Shareholding Pattern (As on Quarter ending September 2018)

Particulars
SEP’ 18
JUN’ 18
MAR’ 18
DEC’ 17
Promoter
51
51
51
51
Public (FII + DII)
49
49
49
49
Others
0
0
0
0
Total
100
100
100
100


Recent Development in Jet Airways:

Cash Infusion news are coming in past 6 months.

August 11 - After State Bank of India chairman says Jet's loan is on the bank's watch list, Jet says it is regular in payment obligations to all banks

August 13 - Airline reaffirms that it is considering various options to meet its funding requirements

August 15 - Report says U.S. private equity firm Blackstone Group LP is in talks to buy a stake in Jet's frequent-flier loyalty programme JetPrivilege

August 20 - Sources tell Reuters that private equity firm TPG Capital is considering investing in Jet, but is not close to finalising a deal

October 4 - Rating agency ICRA downgrades the company's long term loans and NCDs, citing impact of steep increase in jet fuel prices, rupee depreciation, delay in implementation of liquidity initiatives

October 30 - U.S.-based Delta Air Lines Inc expresses interest to buy Jet stake from promoter Naresh Goyal and Etihad Airways 

November 5 - Report says Tata aims to buy the 51 percent stake in the airline owned by Naresh Goyal, and Etihad Airways' 24 percent stake, and merge Jet with Vistara

November 15 - Shares surge nearly 25 percent following reports that the debt-laden airline was nearing a rescue deal with Tata Sons; another report says the Indian government asked Tata to explore buying Jet

December 7 - ICRA cuts Jet rating yet again, cites delays in implementation of the proposed liquidity initiatives by Jet's management

January 11 - Crisis talks between Jet and aircraft lessors have failed to ease a row over late payments, prompting some lessors to explore taking back aircraft, three people familiar with the matter tell Reuters. Etihad is not "in any position to sink new equity into Jet at this juncture," says a person familiar with Etihad's position.

Stock Recommendation for Jet Airways:-

Advice – BUY/HOLD

We will advise to keep this stock in your watch list, and BUY only if any positive news of cash infusion comes from airline.
If you already have a position in Jet Airways then it is advised to hold.


Author:
Deepanshu Khattar

Write me at : deepanshuk0411@gmail.com




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We do not hold any shares in Jet Airways.

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