India’s Jet Airways suspends all operations

Jet Airways aircraft parked on the tarmac at Chattrapati Shivaji International Airport in Mumbai. The Indian airline has grounded all of its operations after failing to secure emergency funding. (AFP)
Updated 17 April 2019

India’s Jet Airways suspends all operations

  • Jet had asked a consortium of lenders led by the State Bank of India to urgently provide four billion rupees ($57.5 million) but said that this had not been forthcoming
  • The airline was once India’s second-biggest by market share but is on the brink of collapse with debts of more than $1 billion

MUMBAI: India’s debt-stricken Jet Airways grounded all of its operations Wednesday after failing to secure emergency funding from lenders, the carrier said in a statement.
“Jet Airways is compelled to cancel all its international and domestic flights. The last flight will operate today,” it said, adding that the decision would take “immediate effect.”
Jet had asked a consortium of lenders led by the State Bank of India to urgently provide four billion rupees ($57.5 million) but said that this had not been forthcoming.
“This has been a very difficult decision but without interim funding, the airline is simply unable to conduct flight operations in a manner that delivers to the very reasonable expectations of its guests, employees, partners and service providers,” it added.
The airline was once India’s second-biggest by market share but is on the brink of collapse with debts of more than $1 billion.
Jet was operating just five planes on Wednesday because it could not pay its bills, down from a fleet of more than 120 at its peak.
The carrier has canceled hundreds of flights in recent weeks, stranding thousands of passengers.
It has repeatedly defaulted on loans and failed to pay staff in recent months.
The consortium took control of Jet in March, pledging to give $218 million in “immediate funding support” as part of a debt resolution plan.
But they have failed to release most of the money and the banks also failed to agree after a meeting of several hours on Monday on how to proceed.
The SBI-led consortium is looking for a buyer for Jet and a deadline passed on Friday for prospective bidders to express an interest in acquiring a 75 percent stake in the carrier.
The SBI is yet to announce a shortlist of prospective bidders but Indian media said four were in the running including Etihad Airways, which already owns a 24 percent stake.
“Jet Airways will now await the bid finalization process by SBI and the consortium of Indian Lenders,” the airline said, adding that it hoped to resume services “as soon as possible.”
Bad investments, competition from several low-cost carriers, high oil prices and a weak rupee have led to Jet’s current financial predicament, analysts say.
A collapse of Jet, and the loss of more than 20,000 jobs, would deal a blow to Prime Minister Narendra Modi’s pro-business reputation as he seeks a second term in ongoing national elections.


STC postpones its acquisition of Vodafone Egypt for second time

Updated 36 min 25 sec ago

STC postpones its acquisition of Vodafone Egypt for second time

  • Kingdom’s largest telecom company says it will need an additional two months to complete the deal

CAIRO: The Saudi Telecom Company (STC), the Kingdom’s largest telecom company, said that it will need an additional two months to complete a deal to purchase a 55 percent stake in Vodafone Egypt.

In January, STC was in agreement to buy the stake for $2.4 billion. In April, it extended the process for 90 days due to logistical challenges stemming from the spread of COVD-19. The company said in a statement that it would extend the period again to September for the same reason.

The Public Investment Fund, the Saudi sovereign wealth fund, owns a majority stake in STC. The ownership of Vodafone Egypt is divided between 55 percent for Vodafone International, which is the target percentage of the Saudi purchase offer, 44.8 percent for Telecom Egypt, and the remaining 0.2 percent for small shareholders.

Telecom Egypt is awaiting the results of Vodafone’s evaluation of the final share price to announce its position on the deal. A Telecom Egypt official stated that the company is still awaiting STC’s position regarding the purchase of the share. If the deal is not completed, it may be presented with its rights to acquire Vodafone’s share, which would allow it to take over 99.8 percent of the company’s shares, leaving 0.2 percent for small investors.

Ashraf El-Wardany, an Egyptian communications expert, pointed out the importance of waiting until the procedures between STC and the Vodafone Group are complete. The results will determine the next steps by Telecom Egypt.

El-Wardany said that the Saudi operator must, after completing the relevant studies, submit a final binding offer at the share price and any conditions for purchase. If approved by Vodafone, it must submit the offer with the same conditions and price to Telecom Egypt, provided that the latter responds within a maximum period of 45 days to determine its position regarding the use of the right of pre-emption and the purchase, or lack thereof, of Vodafone’s share.

According to El-Wardany, there are other possible scenarios. Vodafone International may not be convinced of the offer or the conditions presented by the Saudi side and the sale may be withdrawn, or the Vodafone group may be ready to sell and has prepared another buyer for its stake in Egypt in the event of rejecting the Saudi offer. It may also it back away from the deal and continue to operate in Egypt for a few more years.

El-Wardany said that if Telecom Egypt decides not to use the right of pre-emption to acquire the remaining Vodafone shares for any reason, it will continue with its 44.8 percent stake.
It may also resort to selling all of its shares or part of it to the Saudi side or to any company that wants to acquire its stake.

“This raises the question of whether STC can acquire all of Vodafone’s shares,” El-Wardany said, adding that the coming months “will make the answer clear.”