Jet Airways: Is the revival of the airline possible at all now?

Companies often rise from the ashes like the mythical phoenix. But in the case of airline companies, that has seldom happened. Once an airline goes down, it rarely takes to the skies again.

However, when the Jalan-Kalrock Consortium (JKC) won the bid in October 2020 to revive Jet Airways, most thought that the impossible might finally happen. However, with both lenders and a staff association questioning the intent of the airline’s new owners, the carrier’s fate might already be sealed.

Jet 2.0 was expected to take wings again from October this year. However, corporate circles suggest the plan is stuck owing to the non-fulfillment of payment obligations by the winning bidder, JKC.

A JKC spokesperson tells BT that it has fulfilled all obligations outlined in the resolution plan ratified by the National Company Law Tribunal on May 20 this year, with all the necessary filings being made by them a day later. “As the handover of the company is still awaited, the revised payment timelines are yet to be determined,” he says, adding that the consortium has already deposited Rs 150 crore with the lenders.

Meanwhile, lenders have pointed out that the Rs 150 crore deposited by JKC is in the form of bank guarantees, and sought an advance payment of `185 crore before the process of ownership transfer can begin.

They have also indicated off the record that they may look at selling the 11 aircraft in their possession. But that may not be an option as the copy of the resolution plan reviewed by BT states that any decision on the sale of assets needs to be approved by the monitoring committee comprising the resolution applicant (Jet) and financial creditors.

Furthermore, the proceeds from any asset sale are to be earmarked for restarting the airline’s operations and not to repay lenders. “At present, it appears the lenders and Jet are speaking in two voices. While Jet claims that they have complied with the conditions of the resolution plan, lenders seem to be unhappy with the slow progress,” says Ajay Kumar, Managing Partner at law firm KLA Legal.

What has further queered the pitch for the lenders is the National Company Law Appellate Tribunal order of October 21 directing the airline to pay `250 crore towards provident fund and gratuity dues of former employees. With the lenders already paring their admitted claims of Rs 7,807.7 crore to Rs 380 crore, the order may have added to their unease. “The NCLAT order seems to be a major bone of contention,” says Kumar.

The situation is aptly summed up by an industry insider. “Jet 2.0 is in a minefield. There is zero precedent of an airline reviving once it has been grounded. Every time an airline goes bust there is a repeat of what General McArthur famously said—I shall return. Except in the case of airlines, none return from the dead. There’s no resurrection, no rebirth!”

@manishpant22