Jet Airways too opts out of Air India bid
After Indigo cancelling its plan to bid for Air India stake sale, Jet Airways too has decided not to bid for a stake in Air India.
According to earlier media reports, Jet Airways was supposed to bid for the government owned Air India in consortium with its European carrier combine partners Air France-KLM and its American partner carrier Delta Air Lines. However, this news was never confirmed by the airlines. It is now speculated that the airline has decided not to participate in the bid, which will be closing on May 14, 2018.
Earlier, Indigo had made an official announcement stating that the airline has not participated in the bid for acquisition of Air India.
The government had invited expressions of interest (EoI) on March 28, 2018 for stake sale in Air India. The government proposes to sell 76% of Air India along with low-fare subsidiary Air India Express and a 50% stake in AISATS, a ground handling joint venture with Singapore Airport Terminal Services (SATS), as a single entity along with most of the national carrier’s debt.
Air India had a domestic market share of 12.3% and international market share at 16.9% at the end of Q3CY17. The government may announce the winning bidder by May 28, 2018.
We believe Air India’s huge debt of Rs33,392cr and government’s plan to sell the airline as a package (including subsidiaries and JVs) may have discouraged the leading airlines like Jet Airways and Indigo to opt out of the bidding.
We believe it is a right move for Jet Airways as the airline is suffering from lower yields from international segment and lower RASK growth (1.4% yoy in Q3FY18). The company has debt of ~Rs7,900cr and acquiring a stake in Air India would have further increased its debt burden.