Even after approvals from the company law tribunal and the DGCA, Jet 2.0 remains grounded, having missing three self-declared deadlines on taking to the skies. Swaraj Baggonkar explains what the relaunch challenges are for the new owners of the airline, which once dominated the Indian aviation market
Where is Jet 2.0 stuck?
Jet’s handover to the new owners remains stuck, though the Jalan-Kalrock Consortium’s (JKC’s) resolution plan was approved by the airline’s lenders and the National Company Law Tribunal (NCLT) in June 2021. JKC has approached the NCLT to direct the lenders to implement the resolution plan, while a lender has sought an increase in admitted claims at the National Company Law Appellate Tribunal (NCLAT). Lenders are reported to have told the NCLT that any relief to JKC will cause “grave harm and prejudice” to Jet’s stakeholders.
JKC says it has met all conditions outlined in the resolution plan and will infuse funds only after the handover. The lenders say that they can only transfer the ownership of Jet Airways once JKC makes payments.
What issues have the lenders raised?
Lenders are not on record about their problems with the resolution plan, but sources say they are unhappy about the plan itself and want a renegotiation. But the plan was first approved by the committee of creditors (CoC) in October 2020, and then by the NCLT in June 2021. As per IBC, a resolution plan, once approved, cannot be amended/renegotiated. The Supreme Court also held in September 2021 that an approved resolution plan can’t be withdrawn.
The haircut taken by the lenders, led by SBI, is estimated at 95% against their total claim of Rs 7,808 crore. JKC proposed to pay Rs 270 crore to past creditors in the first six months of the ‘effective date’, and Rs 195 crore in the second year, with its total liability capped at Rs 475 crore as per the resolution plan, to which the lenders had agreed.
What are the latest developments?
Jet’s lenders are reportedly considering selling 11 planes owned by the airline. However, according to the resolution plan, asset sale is supposed to be led by JKC and overseen by the monitoring committee, which has equal representation from JKC and the banks. As per the resolution plan, the proceeds from the sale are earmarked for restarting Jet’s operations.
JKC announced salary cuts for many Jet employees and also halved the CEO and CFO salaries. Some employees have been sent on leave without pay. The Bureau of Civil Aviation Security revoked the airline’s licence for security training. While there is no official confirmation from JKC if any aircraft is now its umbrella, it is reported that it will start initial operations with leased Airbus A320neo and Boeing 737 MAX planes. Reports further stated the consortium was negotiating for at least 50 planes.
When is Jet 2.0 likely to take off?
Jet Airways is facing some other challenges too. More than two-thirds of Jet 2.0’s employees were also employees of the original airline. But there is an association of former officers and other staff, called the All India Jet Airways Officers and Staff Association, that has sent legal notices to the resolution professional in the matter, JKC and the CoC, seeking payment of PF and gratuity dues before any sale of assets, as ordered by the NCLAT.
The Directorate General of Civil Aviation (DGCA), in May this year, granted Jet 2.0 the crucial Air Operator Permit (AOP). This was after the airline completed the required set of ‘proving flights’ with key DGCA officials on board. Proving flights involve DGCA-ordered diversions from a flight plan to test an airline’s readiness. Jet Airways 1.0 had suspended flights in April 2019. JKC says it is committed to restarting the airline despite the numerous hiccups and can do so in under 90 days from the date of transfer of ownership. It has letters of intent for aircraft, engines, IT systems, ground handling services, catering, call centre, and all of the other services. The airline can now only take off in 2023.