By Abhiruchi Ranjan
Jet Airways and its employees are at loggerheads after management announced that it intends to slash salaries by 25%. In other news, Elon Musk may turn to the Chinese to resolve its financial woes. Here are some business stories you may have missed form last week.
Jet Airways to cut corners
Indias oldest private sector airline Jet Airways proposed a 25% pay cut to its pilots and engineers to ensure longevity in the industry. The decision comes at a time where spiralling fuel prices, a weaker Indian rupee and piling working capital loans are hurting the cost structure of the company. Both the National Aviators Guild (NAG) and the staff have met with management and put their foot down on not accepting the decision. The Naresh Goyal- and Etihad Airways-led airline giant reported a net debt of Rs 81.5 billion as of March end. As per sources, senior management have already faced the 25% slash in salaries.
Update: As of August 6, 2018, Jet Airways is assumed to have shelved plans of this proposed cut, and has cleared its full dues towards employees’ salaries.
Reliance forays into online retail market
Reliance Retail is the newest market player that is set to enter the online retail market. Competing against the likes of Flipkart, Amazon, PayTm mall and Xiaomis Mi, Mukesh Ambanis company would be targeting the consumers of smartphones and consumer electronics as they are the largest selling online categories. Leveraging on its Q1 pre tax profit of Rs 10.69 billion and the upcoming festive season, the firm is expected to record a large amount of sales. This wont be Reliances first venture into the e-commerce section. With Ajio.com, Reliance Trends and Reliance Smart, the conglomerate already caters to the needs of consumers in the fashion and online groceries segments.
Tesla considers Chinese funding for its $5 billion factory
In the face of diminishing capital, investors of Tesla Inc. have asked the company to turn to the Chinese for additional funding. With most of the money tied up in the production of Musks ambitious Model 3 sedan, plans of opening a $5 billion factory in China have become a priority in order to avoid the 25% additional tariff that has been imposed on imports of US-made cars. The Chinese market which is the biggest in the world for electric cars and the second largest for Tesla makes it imperative for the firm to start production there by 2020 and not allow Chinese automakers to capture the market.
Germany caught in US-China trade war
U.S and Chinas quid pro quo trade policy has seriously backfired on Angela Merkels firms. German companies are facing the brunt of the ongoing US-China trade war. Continually rising tariffs has made trade an expensive bet for German firms based in the US and China, which has led to a lot of firms considering shutting down production or relocating to other countries to comply with reducing costs. Berlin-based firms are also embroiled in the ongoing feud as they have an international network of suppliers and their overseas customer relationships. The dispute between Donald Trump and Xi Jinping intensified after 25% tariffs on Chinese imports worth $200 billion were levied and China threatened to impose the same on $60 billion worth of goods.
Union cabinet gives go ahead to LIC-IDBI deal
The Union cabinet gave the green light to the LIC-IDBI bank deal. The approval by the cabinet has paved way for the IDBI bank acquisition to receive a nod from the Reserve Bank of India and the Insurance Regulatory and Development Authority of India. The insurance company is expected to pay between Rs 100 billion and Rs 130 billion for a 51% stake in the bank. The acquisition has been in the pipeline since IDBI has grappled with accumulating losses and bad loans. As of March 31, 2018, the poorly-performing institution reported a loss of Rs 82.3792 billion and gross bad loans has almost increased two fold to Rs 555.8826 billion over last year.
Abhiruchi Ranjan is a writing analyst at Qrius