The Jalan Kalrock Consortium (JKC), the winning bidder of Jet Airways has said the delay in the handover of the airline by the lenders will lead to “some difficult but necessary near-term decisions to manage our cashflows.” Sources have said that leave without pay, salaries slashed to almost half and renegotiations on vendor payment timeline maybe on the cards.
In a clarification statement on Friday, JKC said that after the NCLT’s approval, all conditions precedent, as outlined in the resolution plan were completed by May 20, 2022, and the necessary filings in this regard were made before the NCLT on May 21, 2022. “We have not breached any term of the resolution plan, and we remain committed to the revival of Jet Airways,” it said.
JKC said it has deposited ₹150 crore as required under the court-approved resolution plan with the lenders, with the remaining to be invested only after NCLT’s next steps are fulfilled regarding the handover of the company to the consortium.
“While we await the handover of the company as per the NCLT process, the longer-than-expected time being taken for the same may result in some difficult but necessary near-term decisions to manage our cashflows to secure the future while the airline is still not in our possession,” it said.
Sanjiv Kapoor, Chief Executive Officer, Jet Airways in a statement said, the terms for contracts were negotiated in line with the planned October 2022 launch timeline.
Sources said that, “Temporary pay cuts and Leave Without Pays (LWPs), renegotiating vendor payment timelines among other things. Almost all employees, may have to let go of at least 40-50 per cent of their salaries. The company needs to conserve cash given the much longer than expected time it is taking to transfer ownership,” the person said.
Currently, close to 250 employees work at Jet Airways. Sources have told that close to 40 per cent of them are on the payroll of Murari Lal Jalan’s subsidiary company, Orian whereas the rest come from the lenders.
Ankit Jalan, Board Member, Jalan-Kalrock Consortium, said in a statement that “The revived Jet Airways will also provide additional career opportunities, including the airline’s former staff who currently make up more than 60 per cent of the current workforce, and for many more as the revived airline grows. Jet Airways would be a shining example of the IBC process working as intended in India,” he continued.
Recently, the previous employees of the airline got an order in their favour from the NCLAT which asked the company to pay ₹250 crore towards provident fund and gratuity. As per the revival plan, the consortium proposed a total infusion of ₹1,375 crore. This includes ₹900 crore towards capex and working capital and ₹475 crore to settle claims of all creditors. Of this, ₹52 crore has been set aside for the employees and workmen, the rest is saved for the lenders.
In its recent application to the NCLAT, the consortium said it is prepared to pay a capped amount of ₹475 crore, but unable to pay over and above this.
“The country needs to understand how bankruptcy is meant to work. Not adding to the list of liabilities after the fact and delaying ownership transfer like this,” a source familiar with bankrupty laws told BusinessLine.