This was the year they were supposed to overcome their unfortunate bankruptcy and make a triumphant comeback. They hired aviation expert Sanjiv Kapoor (formerly of Spicejet and Vistara) to oversee operations. They declared on social media a huge hiring drive for cabin personnel. They demonstrated snippets of their test flights. They indicated that ticket sales would begin in October. They planned to begin operating flights in November.
But what are our alternatives?
Zero
Okay. Not exactly accurate. Actually, there is a great deal of negative news surrounding the once-dominant airline in India’s sky.
For example, there is the most recent ruling from the National Company Law Appellate Tribunal (NCLAT). It stated that the investors that bailed out the airlines would have to provide more money than they had first pledged. Dues for the provident fund and gratuity were owed to Jet’s employees.
When Jet Airways declared bankruptcy a few years ago, it owed various parties 8,000 crores. Obviously, no purchaser was willing to assume all that debt. When a group of businessmen (the Jalan-Kalrock consortium) agreed to purchase the airline for 1,375 crores, there was tremendous hope regarding the airline’s future. The only stipulation was that they would set aside 475 billion to repay lenders and satisfy employee obligations. The remainder was set aside to reconstruct the airline.
However, the NCLAT order now throws a wrench into the works. They want the consortium to handle PF and gratuity payments as well. Not included in the original plan. That is, the investors must now provide a few hundred billion rupees in addition to what they first pledged.
However, will the JK consortium readily accede to this demand?
Well, it doesn’t seem like they will.
According to an article in The Morning Context, a representative for the consortium stated, “The NCLAT orders do not affect JKC or their plans for the rebirth of Jet Airways, as their liabilities towards former creditors are capped and all claims must be satisfied within the abovementioned capped sums.”
What they are claiming is that any ‘dues’ will be deducted from the 475 crores that were agreed upon. No further funds will be extracted from our pockets.
Nevertheless, this is an NCLAT order. What can the consortium truly accomplish?
Well, they may lessen this additional responsibility by paying banks a smaller portion of the 475 crores they intended to reserve. However, this is likely to upset the bankers.
Consequently, it’s possible that we’ll end up in court once more as the JK consortium and banks dispute. The banks will require what was promised. The JK consortium will claim that the NCLAT’s decision departs from the terms of the original agreement. They will argue over the intricacies of the agreement. This might keep Jet grounded for an extended period of time.
There is other awful news.
One of the firms rescuing Jet Airways is the United Kingdom-based Kalrock Capital. In addition, one of the PE fund’s founders is a man named Florian Fritsch. Now the issue is that Fritsch is under scrutiny in Europe. Authorities suspect he is involved in money laundering. In addition, they have taken some of his assets.
Given that there is such a serious charge against one of the interested parties, the crucial question is whether the Indian bankruptcy courts will halt the takeover.
We simply do not know. One argument is that because he is not directly involved in the transaction, this may not have a significant impact on the outcome. Sure, buyers must meet a sort of “fit and proper” criterion when they rescue enterprises, but in this instance, you cannot condemn the PE fund if the company’s founder is engaging in questionable activity. It is a distinct entity. It should be handled as such, and hence, according to some experts, this shouldn’t have a significant impact on the future of airlines.
Unfortunately, the troubles do not end there.
It appears that the JK consortium has not yet made the promised payments.
See, the JK consortium will compensate ex-employees 52 crores by November 11. However, we are uncertain as to whether or not they have made that payment. They are also required to pay lenders approximately 185 crores on November 16. And although the deadline has not yet arrived, lenders remain cautious. They are uncertain whether they will be paid in full.
And the consortium cannot assume complete control until payment is made. They cannot lease a fresh fleet of planes till then. And they cannot fly if they cannot lease a new fleet. The question is, then, why on earth did Jet Airways tell us it will return in November if it is merely biding its time to settle all debts?
And how will they fly if they don’t even have the crucial slots? Think of slots as permissions granted to airlines like Jet to land and take off at specific times. And Jet Airways possessed excellent slots. 750 of each. But when it went bankrupt, the business went to other rivals.
Therefore, they must now settle all debts prior to assuming full ownership, prepare the fleet, secure the crucial slots, and hopefully take to the skies by the end of this month. That’s a lofty expectation for anyone. To make matters worse, the company has already incurred losses of nearly 700 crores in the first half of this fiscal year.
Will Jet take flight shortly?
We cannot say. However, we hope it does.
