World’s Best-Performing Airline Stock Is Bankrupt Indian Carrier

All airlines are feeling the coronavirus pinch but one that hasn’t flown since April 2019 aftercollapsing under a pile of debt is the world’s best performing — at least from a share price point of view.

Stock in Mumbai-listedJet Airways India Ltd. has surged almost 150% this year versus a 42% plunge in the 27-member Bloomberg World Airlines Index, which comprises the globe’s biggest carriers.

Its runaway gains have market watchers scratching their heads, especially since Jet Airways is undergoing bankruptcy proceedings, has almost 17,000 creditorsseeking claims of around $3.4 billion and has had most of its landing slots confiscated. It doesn’t have any employees to speak of, either.

A panel of creditors did approve aresolution plan last month, bringing the recovery of any dues one step closer, but that doesn’t guarantee a resumption of flights.

Retail investors are the last ones to get anything out of a bankruptcy, yet some are buying in the hope Jet Airways will successfully emerge from a restructuring, said Ajay Srivastava, managing director of advisory firmDimensions Corporate Finance Services. The airline isn’t being thought of as a going concern, but a shell containing assets that may be sold, he said.

In its heyday, Jet Airways was India’s No. 1 private carrier, taking on the monopoly of state-runAir India Ltd. and offering intercontinental voyages with free gourmet meals and in-flight entertainment. But a slew of budget carriers that offered no frills, ultra-cheap tickets ate into its market share and Jet Airways started to drown in debt.

The resolution plan for Jet Airways was submitted by two individuals, Murari Lal Jalan and Florian Fritsch, exchange filings show. Jalan is abusinessman with investments in India, Russia and Uzbekistan. Fritsch is the chairman ofKalrock Capital Management Ltd., a London-based financial advisory and alternative asset manager. The filings don’t state how the men plan to restructure the airline.

Ashish Chhawchharia, the court-appointed professional running Jet Airways’ insolvency, didn’t respond to a request for further information. Jalan, who is based in Dubai according to media reports, couldn’t immediately be reached for comment. Manoj Madnani, described as a board member of the Jalan Kalrock consortium, asked last week that questions be sent over email and hasn’t immediately replied.

Other investors may be hoping Jet Airways goes “the Ruchi Soya way,” Srivastava said, with reference to a food company run by a yoga guru whose shares rocketed on thin volumes after an insolvency plan was approved.

Ruchi Soya Industries Ltd. was acquired by a consortium led by Baba Ramdev’sPatanjali Ayurved Ltd. late last year. The founders held 99% of Ruchi Soya’s capital as of March 31. Its shares surged almost 500-fold on tiny volumes before pairing gains.

To limit that scenario in future, India’s securities regulator is considering changing the rules for firms emerging from bankruptcy, proposing that companies that relist havesix months to boost their free float to at least 10%, down from 18 months currently.

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