Ever since that day, Jet Airways has juggled from one public crisis to another and finally, right during the general elections of India being held since 11 Apr until 23 May (when the results shall be announced), Jet Airways has collapsed!
Knowing what we know about the company and how India works, it went exactly as we had predicted.
Everything went wrong, no one helped (nor could help) the company and finally Jet Airways collapsed despite 2 interventions himself by the PM of India.
We discussed with our clients and several individuals who follow this sector or know about the markets and they suggested to us that this won't happen but we advised them all that they don't understand India as well as we do.
We asked them all to wait patiently like we were waiting, until today.
Everything went wrong, no one helped (nor could help) the company and finally Jet Airways collapsed despite 2 interventions himself by the PM of India.
We discussed with our clients and several individuals who follow this sector or know about the markets and they suggested to us that this won't happen but we advised them all that they don't understand India as well as we do.
We asked them all to wait patiently like we were waiting, until today.
We can add one more "We told you so" to our cap.
Here is our prediction from 14 Aug 2018:
Due to the bankruptcy of the largest private airline who had 123 planes and 23,000 odd employees, other airlines have gone a lifeline who are doing much better financially and have also improved their services in India.
India is a VERY tough market for the best of companies, entire banking system, non banking finance sector, telecom sector, airlines, real estate sector and now even the postal sector are all in collapse mode.
"In the past three fiscals, the revenue deficit of the Department of Posts, trading as India Post, has ballooned nearly 150% from Rs 6,007 crore in FY16.
It is now reportedly the biggest loss-making PSU, leaving headline-grabbing losses of the likes of Bharat Sanchar Nigam Ltd (BSNL) and Air India far behind. "
15 Apr 2019: India Post losses touch Rs 15,000 crore in FY19; replaces Air India, BSNL as biggest loss-making PSU
Job losses across India in the middle class are happening at an astonishing speed.
If businesses are not growing or opening rather many are closing, new graduates and post graduates are not getting any jobs in millions, old jobs are being lost in millions, therefore, the entire Indian economy will keep slowing while more major companies will collapse in the months ahead.
"A government report leaked earlier this year had said the country's unemployment rate rose to a 45-year high in 2017-18."
In India, as well, the worst is yet to come....
How much of a loss does Etihad take on this, going forward will this help Etihad as they won't have this company sucking money from them? Why did they purchase it in the first place? When will Etihad finally merge with Emirates? I know back in 2008 crisis, before dubai and abu dhabi agreed to rename the Burj Dubai to Burj Khalifa, I know that Abu Dhabis first request for a bialout was ownership of Emirates airline but Sheikh Mohmd Maktoum declined this and offered up the Burj Dubai instead...possibly when the bills come due again it will finally be Emirates handed over?
ReplyDeleteHello,
DeleteThank you for visiting and for your comment.
Actually, Jet Airways is not sucking the money, Etihad has made blunder after blunder. They should not have invested either in Air Berlin, nor in Alitalia and neither in Jet Airways.
We had advised some people not to close this deal with Jet because it took them well over 3 years, almost 4 years to conclude the Jet deal so they had lot of time to think but no one listened to us in 2013-2014 because we know what India is.
India is a deep rabbit hole of losses and humungous mistakes. Emaar, Etisalat, Etihad, Bahrain Telecom, Nokia, Swedish Telecom, GE, BMW, Barclays, RBS etc whoever has invested in India has all lost millions.
We had told them then no one from UAE will ever invest again in India and until this day, after the Jet deal concluded, UAE has not invested a penny in India rather they have withdrawn, with the latest being the closure of ADCB and other banks in India which is not even in public domain yet.
Fortunately, this loss is "only" USD 400m for Etihad who never made a penny in the past 5 years.
On top, Etihad has shut their call centres and airline offices in India last year or in 2017.
They invested in Jet because the previous CEO James Hogan with the blessings of the Sheikhs had an unlimited cheque book to buy any airline as a partner in the world. They wanted to be "better" than Emirates especially after the 2008 crisis. But it was different world then and 2014 onwards the entire world has changed and is collapsing like dominoes which we had predicted in Sept 2014.
Every single investment failed, James Hogan was shunted out and the owners of Etihad are paying a very heavy price for their mistakes. They have lost USD 4.8 billion in the past 3 years. This year their loss just for Etihad will go above USD 6b over 4 years.
Etihad merger with Emirates may or may not happen. Very hard to predict with so many factors in play.
Etihad and EK both are bleeding heavily. Just a merger is not the answer. They need billions and they need rising volumes of passengers while their volumes are dropping as are their service standards. Accidents or mishaps of EK and Fly Dubai are happening on top. Etihad cannot even pay their debt which EK will need to pay should they decide to merge which is a DEAD loss.
Abu Dhabi has taken over all the assets of Dubai already and taken away almost all their powers too. Dubai owns almost nothing now.
Technically, the people remain the same but control does not come from ownership in the world of GCC. It comes from power and backroom deals and $$$.
Along with banks, airlines, businesses, malls, hotels, restaurants, theme parks, hospitals, airports, developers, contractors etc, everything is in a massive collapse (due to 70%-80% decline in cash flows in the economy) where in every single top CEO asks billions from the Sheikhs in Dubai or AD on an hourly basis!
The bills are due in AD (Etihad) who are unable to pay, Dubai has AD to back them, who does AD have as back up? Nobody.
Is it any wonder that they make fines of 500k or 1m dirhams on taking rain photos or selfies?
Let us see who conks off next. Someone should conk off any month now.
Thank you and best wishes,
Hi Manoj, Thanks for insightful articles and updates. Yes, you have been right many times along the past few months. But, would like to understand which countries, cities, locations are on the other end of the spectrum of 'The worst is yet to come'....I mean, where do you foresee positive growth in the coming years as you seem to be negative on pretty much every place/country.
ReplyDeleteHello,
DeleteThank you for visiting and for your comment.
If you can kindly provide which article is not factual in any of our blog posts we will greatly appreciate?
Those are not negative views, they are all REALITY.
Many people get rattled with the reality in the future.
It has nothing to do with us, we are just the messenger and "connect the dots".
We have absolutely no influence or control on hotels shutting in Malaysia or 8,000 stores closing in America or Etihad not paying their debts or 20 plus banks merging in GCC or thousands of Singaporeans losing their life savings or President Trump putting tariffs on everybody...
We don't believe that our blog is in any way asking Etihad or Jet Airways or Abraaj to go ahead and default.
But we take pride in our ability that we predicted all those outcomes before anyone else in this world.
Meanwhile, China, Russia and Philippines are doing well on the "other end of the spectrum" and perhaps some small insulated economies like tiny islands in Caribbean or Fiji etc.
Thank you and best wishes,