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Old 27th March 2019, 16:15   #16
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

I agree with many points put forth by fellow members. One other thing to consider is the RBI's Insolvency and Bankruptcy Code (IBC) which has given more teeth to lenders especially Bankers to take swift action. IBC was not there when kingfisher defaulted.
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Old 27th March 2019, 16:20   #17
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

Unlike Kingfisher, Jet Airways is in a better place.

- Jet Airways owns prime landing slots at Indian and international airports
- Lots of serious investors (Eg: Etihad) looking at Jet Airways
- JetPrivilege loyalty program is apparently worth around $1 billion and private equity investors are interested in buying stake in this separately.
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Old 27th March 2019, 17:39   #18
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

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Originally Posted by karan561 View Post
Dawood Ibrahim
Sharad Pawar
Naresh Goyal
Just search these 3 names together on Google & there would be enough articles available which might have the answer to your question GTO.
So in your opinion the government convinced PSU banks to bail Jet Airways out because it is financed by, according to Swamy's statements, Dawood Ibrahim and a prominent opposition politician?

That is an interesting reason for any sort of bailout.

Naresh Goyal being forced out of Jet Airways is a welcome move though, the era of large companies being run like personal property by a single industrialist and his family is long past.

A professional CEO - none of Jet's previous CEOs had a long tenure at the airline when the Goyals were in control and asserting their hold on the company actively - will be critical to turn the airline around.

Last edited by hserus : 27th March 2019 at 17:43.
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Old 27th March 2019, 17:45   #19
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

You could ask - why was Lehman allowed to go down in 2008 and some of the other Wall St. banks with equally dirty balance sheets were back stopped by the US FED by way of forced mergers and what not. You will find some common threads -

1. The CEO/Chairman's relationship with the govt. apparatus is of tantamount importance. Flashy guys who show off wealth or are perhaps a bit aggressive, cocky and/or brutish often get the stick.

2. Balancing public perception - it's election season and the government surely will not want to make headlines for allowing massive job losses. But, also, the govt. would not like to be seen using public money to bail out private companies. I guess on weighing these two, they saw it fit to stick with avoiding the job losses since the other factor is not understood that well by the masses.

3. It is now public knowledge that Mallya was also guilty of siphoning off cash from Kingfisher for his own interests. Something we have not heard about Mr Goyal yet. So, chances of a backlash for bailing out a company with questionable corporate governance probably does not exist.
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Old 27th March 2019, 17:45   #20
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

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Originally Posted by hserus View Post
So in your opinion the government convinced PSU banks to bail Jet Airways out because it is financed by, according to Swamy's statements, Dawood Ibrahim?
Not allowing Kingfisher to recover to reduce competition can be controlled too, if you know what i mean.
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Old 27th March 2019, 17:48   #21
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

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Originally Posted by rovingeye View Post
3. It is now public knowledge that Mallya was also guilty of siphoning off cash from Kingfisher for his own interests. Something we have not heard about Mr Goyal yet. So, chances of a backlash for bailing out a company with questionable corporate governance probably does not exist.
"Yet" is the operative word. Goyal's 80% in Jet Airways was held through an Isle of Man holding company Tailwinds Ltd.

Besides the Isle of Man TT, the island is rather well known for being a tax haven. https://www.kmiconsultants.com/isle-of-man.php

It will need detailed forensic accounting before anything at all becomes apparent. And that is not likely to be triggered in this case.
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Old 27th March 2019, 18:34   #22
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

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Originally Posted by ajmat View Post
  1. Upcoming election - note it has been a Govt owned bank pressurised to take over
It's unfortunate how negativity is spread without considering the facts. Everything is blamed on the government so easily, if Jet wasn't bailed out government would have been criticized now if it is being bailed out it's for political motives!

KFA and JET are two entirely different cases, but still just for the arguments sake why KFA wasn't bailed out in 2012, why the government let thousands of jobs dissolve and people suffer at that time?

Why do governments bail out businesses? Is it just for votes? Remember how all the foreign investment had dried up last time around when the previous government was busy scamming and letting several companies die and investors money drown like in the case of KFA.

Team- BHP is non political, please let it be so. Thank you.
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Old 27th March 2019, 18:51   #23
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

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Originally Posted by hserus View Post
Besides the Isle of Man TT, the island is rather well known for being a tax haven. https://www.kmiconsultants.com/isle-of-man.php
Tax haven as in favourable tax rates, yes. But not tax haven as in hide-or-launder-money. IoM has stringent documentation requirements for money parked or passing through there.

(I know because I used to have some GBP money invested through an IoM bank. The amount of documentation required year on year was phenomenal.)
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Old 27th March 2019, 22:04   #24
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

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Originally Posted by wrongturn View Post
It's unfortunate how negativity is spread without considering the facts. Everything is blamed on the government so easily, if Jet wasn't bailed out government would have been criticized now if it is being bailed out it's for political motives!

.
Why were the banks "persuaded" to convert debt into worthless equity? They can barely run a bank yet alone an airline! Owning a bleeding asset will lead them into a major debt trap. Jet could have been saved long time ago if the Goyals merely exited and allowed competent investors to restructure this. This happened successfully to Spicejet.

Bad businesses should be allowed to fail. It is a tough choice but we need to be efficient. There are so many businesses have no justification to survive.

Again in the UK, back in 2008, the government stepped into rescue overstretched banks. However, there were tough caveats and clear plans to exit within 5 years. While the banks have survived, the share prices have underperformed and banks have shrunk. When Tata's asked for a hand out for JLR, the UK Government wanted control which would be disaster, Tat borrowed heavily instead but managing the debt at the moment is another disaster.

Unless SBI does a quick flip, this will be a lumbering millstone for them. Again, the timing is a bit too convenient.

Last edited by ajmat : 27th March 2019 at 22:13.
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Old 27th March 2019, 22:42   #25
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There are no free lunches in this industry.

Fact is public money is being used to bail out private company. No news anchor worth his salt is shouting on prime time. To put it in perspective let's rewind six to eight months back. Avengers Airlines was suddenly put on sale to be completed within six months by the then finance minister working for the supreme intelligence (whoever they might be 😂?) Amidst all this a certain THANOS AIR bid for AVENGERS but it wasn't to be, and now THANOS AIR is being bailed out by Terran units which could be because he holds the certain illegal stone in his existential gauntlet. That illegal stone may could have revealed the real stones. But alas that's not to be and we will type and contemplate the reasons while the supreme intelligence laughs all the way the SBI coffers.
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Old 27th March 2019, 23:11   #26
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

The "current festival" demands that the govt go all out to save the airlines and its jobs. No one would like to be seen so heartless as don't give a damn, at the moment.

This is a temporary measure and not going to bring in much to the lenders. SBI went on record to say that they will look out for a buyer post the "festival".

But practically govt is just forcing them to throw good money after bad.

This is same as the ongoing pumping of money into Air India. In the name of some such nationalism AI is just kept afloat.

Had the "festival" been not there and the powers that be making a little effort, govt could have merged AI and Jet to form a behemoth to take on all others. It could have been big boost to the industry.
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Old 27th March 2019, 23:28   #27
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Quote:
Originally Posted by fordday View Post



Had the "festival" been not there and the powers that be making a little effort, govt could have merged AI and Jet to form a behemoth to take on all others. It could have been big boost to the industry.


Why not merge jet into indigo and make a profitable behemoth which can take over the entire subcontinent market and just shut AI ? or by the same logic let's. Just shut AI oh wait if we do that then how would a failing private airline merge with it and justify taxpayers money being used for keeping it afloat. Just shut AI merge all the private airlines into one single airline and imagine what that would be like SPIJINDIGOOOO, And let the PSU's own them THATS what we need.
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Old 28th March 2019, 01:45   #28
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

haha, didn't know Team-BHP was allowing political discussions these days. If it wasn't, then this thread surely will roll into one.

But my question is - why do banks even have to bailout Private companies in the first place?
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Old 28th March 2019, 02:26   #29
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The logical answer would be -
The banks think that selling the equity share in the airlines will fetch them more money than just selling off the assets under the IBC. This way they can make money because of the intangible assets like landing points and international and domestic routes, which would have fetched them nothing if the IBC would have come in effect.
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Old 28th March 2019, 05:58   #30
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Default Re: How come the PSU banks are saving Jet Airways, but didn't do the same for Kingfisher?

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Originally Posted by filmaka View Post
The Banks should have bailed out Kingfisher Airlines, It was a global Standard in Luxury and was years ahead of its times, Till date no airlines Domestic or International can still match the style of Kingfisher, Their Buses were amazing, The Inflight services and food was amazing. The airlines was bringing good name to the Indian Hospitality industry. Wish the airlines and those standards can be brought back to the Indian Aviation Industry.
But, in order to sustain a business like that, you need to charge accordingly. How many people do you know that will pay higher fares when there are cheaper 'no-frills' airlines available. Especially for domestic flights of three to four hours maximum. It might work on international routes where the experience is important and things like a meal matter.

Essentially, both Jet and KF are struggling/bankrupt because they are full carriers operating at no-frills fares. Not viable at all. Jet will need to either change their business plan or will eventually go bankrupt even after this fund infusion.

In my view, Jet should have been allowed to fail, just like KF was
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