Logistics

Jet Airways crisis: Lenders explore ways to utilise 15 Jet planes, protect valuable assets

PTI New Delhi | Updated on April 19, 2019 Published on April 19, 2019

Banks had rejected emergency funding request of Jet Airways that forced it to ground operations. File photo

Jet Airways owns 16 aircraft, including 10 wide-body Boeing 777-300 ERs, rest of the planes were on lease

Lenders are exploring ways to utilise about 15 planes owned by Jet Airways and also discussing with authorities on protecting the valuable assets, including airport slots, of the now-shuttered airline, banking sources said.

As they wait for completion of the bidding process for stake sale, the domestic lenders, led by State Bank of India (SBI), are looking at options to raise funds from available assets of the carrier, which has served the Indian skies for nearly 26 years.

Left with no cash to continue flying, the once-mighty Jet Airways on Wednesday suspended operations temporarily -- a decision that has also left more than 20,000 employees as well as various other stakeholders in the lurch.

The sources said the lenders are actively considering proposals, including from Air India, for utilising the planes owned by Jet Airways. The use of these idle planes would ensure that they remain in good condition as well as earn revenues, they added.

Jet Airways owns 16 aircraft, including 10 wide-body Boeing 777-300 ERs, rest of the planes were on lease. The full-service carrier had more than 120 planes in its fleet last year.

Read: For pilots flying last Jet plane, it was a flight filled with emotion and hope

Earlier this week, Air India Chairman and Managing Director (MD) Ashwani Lohani wrote to SBI Chairman Rajnish Kumar saying that the airline is looking at leasing five of Jet Airways’ Boeing 777s and operate them on London, Dubai and Singapore routes.

As concerns mount over the future course of Jet Airways, the sources said lenders have been proactive and cannot be blamed for the current situation at the airlines.

“They (lenders) have been actively engaging with the company for almost nine months ever since the airlines started incurring cash losses and have been urging the management to come forward with a definite plan for resolution.

“Unfortunately, the management and the promoter delayed in taking a decision leading to the present situation. The lenders continued to support the airline during this period,” one of the sources said.

The decision of founder-promoter Naresh Goyal to step down came as late as March 25 and he signed a binding agreement to facilitate stake sale only in the second week of April. By then, the airline’s operations had been severely affected, the source added.

The source also said that banks have now put in place a transparent bidding process for a new investor to take over the airline and the outcome would be known by May 10.

According to the sources, lenders have also reached out to relevant authorities to protect valuable assets for the airline, such as airport slots, as it would improve the chances of a better revival. The best revival prospect would be to have a new investor who brings in sufficient cash and also has a definite plan going forward, they added.

Also read: AI offers ‘rescue’ fares to stranded international passengers of Jet Airways

It is also learnt that while the promoter has stepped down and entered into a binding agreement, there has been no change in complexion of the board of the airline due to technical reasons.

“The conversion of debt into equity was conceived as a way to allow a new investor to come in. Also, while the lenders have nominated A K Purwar and Kapil Kaul to the board of Jet Airways consequent upon stepping down of the promoters, this is yet to take effect on account of some technical reasons,” another source said.

The banks have been working with the same executive management team who have been in charge of running the company even after stepping down of the promoter, the source added.

On Thursday, lenders said they were “reasonably hopeful” that the bidding process for the airline will end successfully.

“The lenders after due deliberations decided that the best way forward for the survival of Jet Airways is to get the binding bids from potential investors who have expressed EOI (Expression of Interest) and have been issued bid documents on April 16,” they had said in a statement.

A consortium of seven domestic lenders led by SBI has invited bids from potential suitors. Their debt exposure to the airline is more than Rs 8,500 crore.

“Lenders are reasonably hopeful that the bid process is likely to be successful in determining the fair value of the enterprise in a transparent manner,” it said.

Banks had rejected emergency funding request of Jet Airways that forced it to ground operations.

For more stories : The Jet Airways crisis

Published on April 19, 2019

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.