For Jet Airways India Ltd., it’s always only about one rupee.
As I wrote last month, the troubled full-service carrier needed to garner an additional 1 rupee (1.4 cents) per available seat kilometer to make up for its cost disadvantage against no-frills rivals. Cutthroat price competition denied it that opportunity, and now banks are picking up a majority stake – at a price of 1 rupee for 114 million shares.
The gamble, which seeks to avoid putting India’s oldest private airline into court-administered bankruptcy, will be put to a shareholder vote on Feb. 21.
Beyond that, the details of the rescue plan are fuzzy.
How much of the airline’s 76.54 billion rupee ($1.08 billion) borrowings will get converted into equity? Between 25 billion and 30 billion rupees, estimates an aviation analyst, while an article in the Business Standard pegs the reduction at 10 billion rupees. On the other hand, Chief Financial Officer Amit Agarwal said on a conference call that the deal with banks would cut the debt burden by (you guessed it) “1 rupee.”
