New owners are upbeat, but smooth take-off seems elusive for Jet 2.0

The move to restart Jet Airways as early as summer 2021 might be possible if the new investors pump in a far more funds than what has been stated, and if they receive NCLT (National Company Law Tribunal) and other approvals on time.

On Monday, the new investors, Dubai-based entrepreneur Murari Lal Jalan and London-based Kalrock Capital, said in a statement that they plan to revive the airline as a full-service carrier by the middle of next year.

“As per the resolution plan, Jet Airways intends to operate all of its historic domestic slots in India and restart international operations. If everything goes as per plan and the consortium receives NCLT and regulatory approvals on time, Jet Airways would be back in the skies by the summer of 2021,” the statement said.

However, not many believe that the new promoters will be able to stick to the deadline. “Unless Jet has adequate funding available, orderly and sustained resumption of the airline is not feasible,” Kapil Kaul, CEO, Indian subcontinent, for airline consultancy firm CAPA, told BusinessLine .

He said part of the planned ₹1,000-crore investment will go to the lenders and the remaining amount will not last long.

He pointed out that a new airline without any legacy issues will need $150-200 million (₹1,110-1,500 crore) to start operations, with the ability to bring in steady and long-term capital. “One doesn’t see viable restart based on the information publicly known regarding the investment plan,” Kaul said.

“It is an extremely captive-intensive business. One can’t start the operations a day after the NCLT gives it formal approval. Only when the NCLT approval is in place, can one go ahead and start stitching together other alliances,” said Nripendra Singh, Industry Principal, Aerospace, Defence & Security Practice, Frost & Sullivan. Following NCLT clearance, the government will have to give its nod for the revival of the airline.

Hiring talent

Considering the state of the balance sheet and the financial position of the airline, resuming flights by the summer of 2021 is unlikely, said Singh. “To draw top talent for the management, to hire key personnel... all require money and it isn’t sufficient enough to do so,” he added.

In a recent report, the airline’s resolution professional Ashish Chhawchharia had said that before giving its approval, the NCLT will examine whether the process and the compliances have been carried out and whether all the requirements for resuming the flights have been met. Also, to revive the airline, the government has to return the slots that were earlier with Jet. But it has made it clear that the airline will have to reapply for those slots and receive security clearances for the new promoters and the management as well.

The airline owes ₹44,000 crore from about 22,000 creditors. Of this, the consortium of lenders led by SBI has given loans worth ₹8,000 crore. This is likely to be converted into equity, which could give the consortium a 10 per cent stake in the airline. But, when the decision to convert debt into equity was taken, the airline’s shares were trading at ₹200. Today, it is worth ₹75 per share.

This may need reworking unless the lenders decide to allow the airline’s new promoters to commence operations first.

Convincing customers

Even though the Centre last week allowed airlines to operate at 80 per cent of the pre-Covid flight capacity, Jet will have to start investing in routes to bring back passengers into its fold as they will need assurance that it won’t fold up again, with their ticket fares hanging in the balance.

“The landscape for all the airlines has changed. The business from the corporate sector which was the mainstay of the airline hardly exists now because of travel restrictions and WFH kicking in,” Frost & Sullivan’s Singh pointed out.

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