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Covid-19 dashes hopes for Jet Airways revival

Forum Gandhi/K Ram Kumar Mumbai | Updated on April 10, 2020

Potential bidders are now in ‘watch-and-wait’ mode   -  REUTERS

Lenders set the stage for the airline’s liquidation

Lenders to Jet Airways are gearing up to liquidate the airline as they are losing all hope of finding a new owner for it given the massive stress in the global aviation sector due to the travel restrictions imposed across the globe following the Covid-19 epidemic.

While the lenders had taken 90 more days to find a buyer under the NCLT-led insolvency process before the epidemic broke out, banking sources said it would now be impossible to get a bider at a time when the aviation sector’s outlook is gloomy.

“It (Jet) may head for liquidation. Even those who have evinced interest are likely to back out due to the adverse impact of the Covid-19 pandemic on the global aviation industry. Existing airlines themselves are finding it difficult to survive. So, taking over a sick company will be all the more difficult,” said a source close to the development. NCLT has given three months’ time from March 15 for revival of the defunct airline through a fresh invitation for expression of interest (EOI).

“With the global aviation industry reeling under the pandemic, it is unlikely that new bidders will show interest. Lenders’ total exposure to the airline is ₹7,227 crore,” said the source.

Prudent ARC, Synergy Group and a consortium of the Russian government-backed Far East Development Fund, in partnership with Enso Group, had earlier submitted their EOI. But none of them submitted a financial bid before the deadline expired on March 9.

“While we were in an advanced stage of going forward and formulating our plan, the Covid-19 situation erupted, so we are now waiting and watching the situation,” Pradeep Goel, Chairman and Managing Director, Prudent ARC, told BusinessLine. According to Goel, the aviation, hospitality, and F&B industries are going to take a serious hit. “We have to evaluate it before we take any steps further because one wrong move will land us into a huge ditch and crores of losses. It will be a very critical decision,” he said.

Published on April 10, 2020

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