The Covid-19 pandemic has dealt a severe blow to the already grounded and insolvent Jet Airways. About 40 people who were a part of Jet’s asset preservation team were let go earlier this week. More than a year after its grounding, the airline has found no buyers and lenders are in a fix on how to proceed further. “We are not sure at this point on whether to call for fresh expressions-of-interest (EoI). A decision will be made by Monday,” a senior banker told FE after the committee of creditors’ (CoC) meeting on Wednesday.
Parties that were previously interested in reviving the airline have either backed out or moved too slowly. The lenders have earlier called for multiple rounds of EoIs. The last round was invited in February after the Russian government-backed Far East Development Fund had expressed interest in the airline. On the other hand, liquidating the airline at this juncture makes little sense with the aviation industry undergoing a crisis. With no serious buyers, the CoC last month decided to extend the resolution deadline by 90 days. The earlier 270-day deadline ended on March 15.
Jet’s resolution professional (RP) employed nearly 200 people as a part of the asset preservation team when the resolution process began. With Covid-related disruptions and the resolution slowing to a halt, the livelihood of these employees may be at risk. “March salaries were paid over March and April. There is no update yet on whether April salaries will be paid. Around 30-40 people’s contracts were terminated on May 3. The rest have been kept till July 23. But further head-count decisions are expected,” said one person aware of the matter.
Jet Airways was grounded in April last year after lenders had refused to extend emergency funding to continue operations. A few months later, State Bank of India took the airline to insolvency court after lenders failed to sell it off. The National Company Law Tribunal admitted the defunct airline for insolvency in June last year.
Since then, multiple entities have expressed interest, but so far none has taken talks forward. Before the Covid-19 crisis, Jet’s RP was in the process of partially monetising assets. The RP has been in talks with KLM Royal Dutch airlines to sell Jet’s erstwhile flight rights in Schiphol Airport, Amsterdam, along with a Boeing 777 aircraft.
Jet Airways was India’s second largest airline till 2018, with 13.8% market share. When the airline was grounded, around 16,000 permanent employees and over 6,000 contractual employees were stranded overnight. Shares of Jet Airways hit the upper circuit twice on Wednesday, and closed up 4.83% at Rs 18.45 on the BSE.