Investors are seen pinning hopes on the outcome of the bidding process for Jet Airways set to end on 10 May
But it seems unlikely that any buyer will cut a deal that has positive implications for existing shareholders
Mumbai:Jet Airways shares have been quite resilient through all the crisis over the past few months. On Wednesday evening, the 25-year-old beleaguered private airline informed stock exchanges that it would suspend operations temporarily. When markets opened on Thursday, Jet Airways’ shares were, of course, in free fall. The stock touched a 52-week low during trading and eventually closed the day 32% down. Still, it does appear that the company’s shareholders think this isn’t really the final call to deboard.
“Investors think there is still value to be found and people are pinning their hopes on the outcome of the bidding process for the airline," said an analyst requesting anonymity.
History is not in their favour either. When Kingfisher Airlines Ltd had temporarily suspended operations on 20 October 2012, the markets still gave its shares a value of ₹900 crore. Eventually, the shares turned out to be worthless. However, even in that case, note that the KFA stock had tanked about 40% six months prior to the temporary suspension.
And even if Jet Airways were to revive, its capacity is not expected to bounce back quickly. Edelweiss Securities Ltd analysts wrote in a report on 8 April, “We assume that Jet Airways will eventually lose 50 planes to lessors, which would swerve its fleet size down to 73 in financial year 2021."
Further, it’s not as if the outlook on profitability was bright. A Bloomberg poll of analysts was expecting Jet Airways to post a consolidated net loss of ₹460 crore for FY20. This is after reporting a massive ₹2,916 crore net loss for FY19.