Jet Airways share price continued its slide for the thirteenth straight day after lenders led by State Bank of India (SBI) decided to take the ailing airline to bankruptcy court recover their Rs 8,500 crore dues instead of an outright sale to the lone bidder. Jet Airways share price fell to an all-time low of 32.25 compared to the previous close of 68.30 on BSE. Jet Airways share price has been losing for the last 12 days and fallen 59.23% during the period. Jet Airways share opened at a loss of 9.96% at 61.50 level on BSE. Jet Airways share price has fallen 45.06% during the last one week. The stock has fallen 84% during the last one year and lost 77.85% since the beginning of this year.
"After due deliberations, the lenders have decided to seek resolution for Jet Airways under the bankruptcy code since only a conditional bid was received," SBI said in a statement after a meeting of lenders held on Monday. The lenders are expected to file insolvency proceedings against Jet Airways by June 20 before the next National Company Law Tribunal (NCLT) hearing.
The focus will be on finding a new owner for the airline under the IBC framework to save it. Jet has an overall debt burden of Rs 8,500 crore. The once largest private sector airline, started over 25 years ago by airline-ticketing-agent-turned-entrepreneur Naresh Goyal, stopped flying on April 17 after it ran out of cash and the unpaid lessors took away most of its 100-odd operational aircraft.
A flow of negative news has hit the airline stock recently.
The Income Tax (I-T) Department has summoned Jet Airways founder Naresh Goyal for questioning in relation with an alleged case of tax invasion. This is the first time when an enforcement agency has summoned Goyal on charges of any financial irregularities in Jet Airways.
The investigation wing of the I-T Department has found alleged irregularities in transactions between Jet Airways and its Dubai-based group firms to evade taxes worth Rs 650 crore, sources told the Economic Times. The grounded airline reportedly paid commissions to its general sales agent in Dubai every year. Goyal will be asked to provide an explanation for these payments, they said.
According to the investigation report, such payments were allegedly in excess of permissible business transactions under the Income Tax Act and will not considered as allowable expenses.
On June 14, Jet Airways share price slumped after NSE said shares would be pulled out of Futures and Options trading from June 28. Jet Airways share price slumped over 23% to 84.80 level compared to the previous close of 110.40 on BSE.
On June 11, Jet Airways share price crashed amid a report that Hinduja Group and Etihad Airways may not proceed with plans to resurrect Jet Airways.
London-based Hinduja Group has decided to stop talks to buy a stake in the ailing airline, while Etihad Airways of Abu Dhabi has also stalled its plan to infuse more funds into the Mumbai-based airline, according to a report by Mint.
On June 10, two operational creditors-Shaman Wheels and Gaggar Enterprises-took it to the insolvency court National Company law Tribunal (NCLT) seeking bankruptcy proceedings against the airline.
The development came at a time when banks were looking to resolve the once premier airline's debt issues outside the insolvency process.
Earlier on May 30, cash-strapped Jet Airways had said that it is not in a position to consider and approve the audited financial results for the fourth quarter of FY19.
"The results couldn't be approved in view of the ongoing bidding process undertaken by the domestic lenders for change in the management of the company, coupled with resignation by members of the board of directors, its key managerial personnel and other employees across functions," the airline said in a filing to the Bombay Stock Exchange.
Debt-laden Jet Airways, which has been grounded since 18 April due to funding woes, has seen its top executives exiting the company in the past few months, following the resignation of its founder Naresh Goyal from the board of the airline in March.
Naresh Goyal and his wife Anita Goyal had resigned from the Jet Airways board on March 25, transferring the control to the lenders led by the State Bank of India. Top five executives of the airline, including CEO Vinay Dube, already resigned from the airline citing "personal reasons". Jet Airways has an overall debt of over Rs 8,500 crore. The banks have appointed SBI Capital Markets as the investment banker to find an investor for the company.
Edited by Aseem Thapliyal