India's crisis-hit Jet Airways faces financial audit by DGCA

India’s aviation regulator, Directorate General of Civil Aviation (DGCA) is expected to hold a financial audit on crisis-hit Jet Airways as concerns over the financial health of the country’s oldest private airline rising day by day, according to the sources.

The DGCA has already conducted a financial audit on the state-owned air carrier Air India followed by a special financial audit on Air Deccan. The sources said that DGCA is very likely to hold the financial audit of Jet Airways from August 27.

As per the orders from the country’s ministry of civil aviation, financial audits have also been conducted in the past too to access the financial stability of the airlines. The DGCA is very likely to conduct a similar audit on Air Odisha soon.

India’s market regulator Securities and Exchange Board of India (SEBI) is already looking into the Jet Airways management’s decision to defer its June quarter financial results following the concerns expressed by the airline's audit committee.

Meanwhile, the airline has initiated a formal stake-sale process to raise 275 to 313 million GBP from world private equity firms. The company has reportedly approached bulge-bracket funds including Blackstone, TPG, and others. A global investment bank has already expressed its interest to support the financially sick airline.

In an attempt to push funds into the company, the airline is looking to issue new shares to raise equity capital. The current capitalization of the company stands at 352.90 million GBP and such a fundraising initiative may result in a dilution for current shareholders of the company.

InterGlobe Aviation Ltd., the parent company of IndiGo, is expected to benefit if the financial pressure continues further on Jet Airways Ltd., according to Morgan Stanley.

According to Morgan Stanley, InterGlobe Aviation Ltd., the parent of IndiGo is likely to gain financial benefit from Jet Airways. Proposed salary cuts for employees of the airline, postponement of its June quarterly results, and the concerns over the future of the airline are very likely to benefit the IndiGo to raise its existing capacity and limiting the capacity addition of Jet Airways.

IndiGo has added 34 new planes in the last 24 months boosting its confidence in the domestic and international aviation sector.

Shares of Jet Airways have recorded a fall of more than 66 per cent in 2018, the highest among the three listed Indian airlines. SpiceJet Ltd. has recorded a fall of over 38 per cent followed by InterGlobe Aviation Ltd. of about 13 per cent this year.