Jet Airways’ stock prices hit the upper circuit on Tuesday after NCLT’s Mumbai Bench approved the resolution plan of the consortium of Kalrock Capital and Murari Lal Jalan. However, the airline has many challenges to overcome before it gets air-borne.
The NCLT approval was just the first regulatory hurdle. Jet will need at least 30 licences, approvals, and permits from the Ministry of Civil Aviation, the Directorate General of Civil Aviation and other authorities.
Jet may also have to deal with multiple legal challenges by those who were barred by the IBC norms from taking action against the company post the commencement of the insolvency process in June 2019. Jet Airways’ resolution professional had received over 20,000 claims of ₹44,146 crore, though he rejected claims worth ₹22,268 crore.
“There is likely to be a flood of lawsuits from those whose claims were rejected. For example, employees who were either not onboarded in Jet 2.0 or haven’t got salaries could take legal recourse. Even creditors and passengers, who have not got refunds for cancelled tickets, will be waiting in line,” said an executive involved in the debt resolution process.
Vendors and suppliers whose claims have not been settled will be wary to do fresh business with the airline. “Agitated vendors who didn’t receive their claims may not want to do business with Jet Airways. Even those who may agree to do business with Jet will ask for a heftier security deposit,” said an industry expert.
Regaining slots
The biggest hurdle will be to get back the historical slots. The Kalrock-Jalan consortium has been insisting on restoring the erstwhile slots of Jet Airways. Talks with DGCA and MoCA over the last six months have not led to any breakthrough. Even the NCLT declined to give any direction in this regard.
Ashish Gupta, senior counsel appearing on behalf of the DGCA and MoCA, explained that the way forward for Jet in terms of slots is that it has to submit a concrete business plan and apply for the slots, licenses and permits. “As per the current policy, whichever slots are available will be given.” All of this could take several months, according to experts.
The consortium may also find it difficult to raise funds by selling some of the airline’s assets as they have proposed under the resolution plan. A lot of the company’s inventory including aircraft has not been completely maintained. Selling old inventory will reduce the valuation of those assets and the new owners may not get a desirable value for them.
Another challenge would be to find the right talent, given the way the erstwhile employees got a raw deal.
“The team will have to find talent and not make the mistakes that were made earlier. The consortium may have to pay top packages to attract talent,” said a former executive.