Etihad Airways, National Investment and Infrastructure Fund (NIIF), TPG Capital and Indigo Partners have been chosen as qualified bidders for Jet Airways, say media reports, which added that Naresh Goyal was forced to withdraw his bid after protests from other bidders. The four bidders now enter the next round and have until May 10 to finalise their offers.
Jet Airways still hasn’t received any funds from lenders, which are divided on providing more cash without any guarantees or further collateral. Reports state that some lenders have for more of Goyal’s pledged shares and the aircraft owned by Jet as collateral. Goyal has already pledged 31.2%; he owns 51% of the airline.
Despite lessors pulling their aircraft out and US Export Import Bank beginning repossession action for its 777s, it is looking more likely that the unpaid pilots, represented by the National Aviator’s Guild, will be the first to initiative insolvency proceedings after threatening legal action.
CEO Vinay Dube continues to negotiate with the banks but in the meantime the airline is operating only seven aircraft and is unlikely to last the week without fresh funds.
Meanwhile, European carriers continue to battle headwinds in a difficult operating environment with Lufthansa the latest to report an operating loss for the first three months of the year.
The German airline booked a loss of €336 million for the first quarter, compared with a profit of €52 million in the same period last year. The loss was much higher that the €186 million expected by analysts.
Lufthansa attributed a rise in fuel cost during the quarter, which rose to €202 million, while market-wide overcapacities in Europe also put downward pressure on fares, reported the airline group. Lufthansa also stated that the negative trend was accentuated by the fact that first-quarter results for 2018 had been particularly strong, owing to the capacity reductions deriving from Air Berlin’s demise.
The Lufthansa Group’s Network Airlines suffered a 5.2% currency-adjusted decline in their unit revenues for the period. The unit revenue decline at Eurowings, with its higher proportion of short- and medium-haul routes, amounted to 8.5%. First-quarter unit costs (ex fuel) decreased 0.8% percent at the Network Airlines and 7.2% at Eurowings, both on a currency-adjusted basis.
Lufthansa announced when presenting its 2018 annual results that, in view of the overcapacities in Europe, the strong comparable results for the prior-year period and the interim rise in fuel costs, earnings for the first quarter of 2019 were likely to be down from their prior-year level.
On a preliminary basis, the Network Airlines achieved a loss of €-160 million, compared to €128 million in the prior year. Eurowings loss declined to €-257 million compared to €-212 million in the year-ago period. For 2019 as a whole, the Lufthansa Group confirms its expectation of an Adjusted EBIT margin of between 6.5 and 8.0%.
Ulrik Svensson, Chief Financial Officer of Deutsche Lufthansa, is confident for the next quarter, however: “We are seeing good booking levels for the quarter ahead. At the same time, we have substantially reduced our own capacity growth. And with a reduction in growth also projected for the European market as a whole, we expect unit revenues to increase again in the second quarter. This should be further buoyed by the still-strong demand on our long-haul routes, especially to Asia and North America.”