India’s Jet Airways may be a long way off its comeback course.
The grounded airline was on a massive hiring spree until a few weeks ago, but fresh trouble has surfaced since then: The Jalan-Kalrock Consortium (JKC), its new promoter, is reportedly going slow on the resolution plan.
The consortium (pdf), which includes UK-based asset management firm Kalrock Capital and UAE-based businessman Murari Lal Jalan, officially took over Mumbai-based Jet in October 2020. Neither Kalrock nor Jalan has any experience in managing an airline.
Now, annoyed by the delay in the clearing of dues by JKC, Jet’s lenders are considering selling 11 of the airline’s aircraft to recover some of their losses. If they do that, the company will effectively be forced into liquidation, The Economic Times reported today (Nov. 21).
Earlier, Jet had reportedly enforced leave-without-pay on several of its employees and imposed salary cuts on some others.
Jet’s lenders say that JKC’s failure to make good its bid even one-and-a-half years after the National Company Law Tribunal (NCLT) approved its resolution plan has forced them to consider selling the planes.
JKC, meanwhile, has reiterated its commitment to revive the airline and, instead, blamed the banks for the delay in the transfer of ownership.
In 2020, JKC proposed a total infusion of Rs 1,375 crore in Jet. This included Rs 900 crore towards capital expenditure and working capital, and Rs 475 crore to settle the claims of all creditors.
“...JKC has deposited 150 crore rupees as required under the court-approved resolution plan with the lenders, with the remaining amounts to be invested only after the next steps of NCLT are fulfilled in terms of the handover of the company to us,” it said in a statement released last week.
However, until JKC clears all its dues a transfer of ownership is unlikely. On Nov. 29, the NCLT will hear JKC’s interventional application on the matter.
Denying sending staff on leave, Jet CEO Sanjiv Kapoor recently did clarify that the airline had to take some “temporary decisions” due to factors “outside our control.”
“The team working to revive Jet was not responsible for Jet running out of cash and suspending operations. They are trying to revive the airline using fresh capital, giving consumers more choices, creating more jobs, and bringing back old jobs. They deserve our full appreciation,” Kapoor said.
The 30-year-old Jet Airways operated 600 domestic and 380 international routes before being grounded in April 2019 due to financial troubles. It’s been trying to revive its fortunes after finding new promoters in 2020.