Bidding for the temporarily grounded Jet Airways ends today (May 10) and, if media reports are to be believed, there are no serious suitors for the debt-laden carrier.
SBI Caps, the investment banking arm of the State Bank of India (SBI), which is overseeing the sale process, had last month shortlisted four bidders who had expressed initial interest. Recent media reports, however, suggest that none of these firms—Jet’s minority partner Etihad Airways, TPG Capital, Indigo Partners, or India’s National Investment and Infrastructure Fund (NIIF)—have taken the matter forward.
The one firm bid received so far is from a clutch of lesser-known investors with little aviation experience.
British entrepreneur Jason Unsworth, who had earlier evinced interest in bringing Jet into the fold of his yet-to-takeoff Atmosphere Airlines, is learnt to have placed a bid. He is joined by Lakshay Uttam, founder of Amsterdam-based hospitality firm My World Ventures, and investment ventures Future Trend Capital Investments and Redcliffe Capital.
Another likely bid, to be made today (May 10), is by London-based Adi Partners, according to the news website moneycontrol.com. It will be the first aviation investment for this investment advisory firm, the report said.
However, it remains to be seen if SBI Caps will accept any of these bids, since they were not shortlisted initially.
“Given the current situation, there isn’t any option left, except for creditors to move NCLT (the National Company Law Tribunal, which handles bankruptcy proceedings) and recover their dues,” Mark Martin, head of the aviation consultancy firm Martin Consulting, told Quartz.
The lenders have only themselves to blame for the plight.
Whose fault?
Naresh Goyal’s exit from the board of Jet in late-March was expected to open the doors for new suitors. The banks, led by SBI, had wrested control of the 26-year-old airline from its founding chairman and put it on the block, hoping to recover their dues.
In hindsight, the task was probably an onerous one.
While the airline’s massive debt of around Rs11,261 crore ($1.6 billion) was always a dampener, the banks precipitated things, say experts.
On April 17, the airline halted all operations after it was denied emergency funds. Jet’s prime slots at airports have since been allocated to other players. Its office space in Mumbai’s Bandra Kurla Complex (BKC) has been put on auction by HDFC Bank. The carrier’s fleet size has shrunk meanwhile as lessors reclaimed planes.
“The consortium (of banks) has completely lost the plot without knowing what to do with Jet, and its actions should be held responsible. The lenders were entrusted to save the value of Jet and to pay the employees, but they failed in both of these tasks,” said Martin.
Echoing the same sentiments, Jet’s pilot union, the National Aviator’s Guild (NAG), on May 07 filed a petition in the supreme court, accusing SBI of degrading the company’s value. The NAG also urged the top court to direct the government and the director general of civil aviation (DGCA) to disallow the permanent sale of Jet’s slots.
Reacting to employees’ desperate efforts, Martin said, “The employees should take the hint and start looking for new jobs because it’s over for Jet; any hopes of revival would be just eroding cash, time, and money saved in (their) pension funds.”
Even the government is not hopeful, according to a recent Reuters report. “It is only a matter of time before someone dragged Jet to the NCLT for recovery of dues,” the news agency quoted a ministry of finance official.