Jet Airways’ revised plan of returning to the skies in November is facing rough weather, following a stand-off between the Jalan-Kalrock Consortium (JKC) and the airline’s lenders over pending gratuity and provident fund (PF) payments of Jet’s employees. This is the third deadline that the consortium will be missing in the past six months because the company has not been handed over to them by the creditors.
“JKC has been pursuing with the lenders since May 21, 2022, through multiple written communications to initiate the process that enables JKC’s fund infusion in Jet Airways and implement the plan. As the handover of the company from the lenders is still awaited, the revised payment timelines are yet to be determined,” a spokesperson of JKC said.
On Friday, amid reports that Jet has sent 60% of its employees on leave without pay, CEO Sanjeev Kapoor tweeted ‘it was 100 per cent false information’. In another tweet, he said two-thirds of staff have not been impacted at all, and of the remaining one-third, most will be on temporary pay reduction. “Only a small portion of the total (~10%) will be on temp LWP (leave without pay),” he added.
According to sources privy to the developments, it is only mid- to senior employees who are being sent on leave without pay for the next two months. “They will remain employees of the company and some of them are being affected by only reduced pay to the tune of 25%-50%,” a source said.
The CEO has also taken a pay cut. However, the cabin crew and pilots are not impacted at all and they continue to be paid in full.
While the National Company Law Appellate Tribunal (NCLAT) in its October 2022 order directed JKC to pay the employee dues amounting to around Rs 275 crore, the consortium has cited the resolution plan which has already been approved by the lenders, the National Company Law Tribunal (NCLT) and NCLAT, for its reluctance to pay.
“JKC has already approached the NCLT to give directions to the lenders to allow it to implement the resolution plan,” said an industry source talking about the recent hearing on November 15. In June last year, the Mumbai bench of the NCLT approved the resolution plan submitted by JKC.
“Lenders have not yet provided bank account details for fund infusion, despite multiple requests by JKC to provide it. Nor have they initiated other formalities such as making the company active in ROC/SEBI formalities, etc which must be done by the lenders in order for JKC to infuse funds,” said the source. Jet’s lenders are led by State Bank of India (SBI).
The lenders, on their part, seem to be hesitant since they have already taken a 95% haircut on the deal.
“JKC has already deposited Rs 150 crore with the lenders. There is no delay from the consortium to implement the resolution plan, and we confirm that the JKC is in full compliance of the approved plan, and it remains deeply committed to the relaunch of Jet Airways and to recapture the lost glory,” the spokesperson added.
According to the plan submitted by JKC, the consortium proposed a fund infusion of Rs 1,375 crore, including Rs 900 crore towards capital expenditure and working capital. It also included Rs 475 crore for settlement of all claims of creditors. Both banks and JKC have declined to foot the added liability of payment of PF and gratuity.
“As per the approved resolution plan, JKC has committed to pay employees and workmen of Jet Airways, a sum of Rs 52 crore or their minimum liquidation value, whichever is higher, towards settlement of all their claims against Jet Airways, subject to a maximum of Rs 475 crore. Therefore, JKC’s total liability towards the erstwhile creditors of Jet Airways is capped at Rs 475 crore,” the JKC spokesperson added.