“It was today, one year ago, I operated my last flight for Jet Airways,” wrote Tapesh Kumar in a Facebook post on April 9.
“Little did I know that it would be the last time I’d be wearing this uniform officially. Little did I know that it would be the last time I was stepping into a 737 cockpit,” Kumar, a pilot with Jet Airways, wrote.
Exactly a year back, Kumar along with 25,000 other employees of Jet Airways were hopeful that the airline’s troubles with a debt of over Rs 14,000 crore would be over once the founder Naresh Goyal was asked to exit the company. The airline was taken over by the lenders led by the State Bank of India and a global hunt ensued to find a new owner for one of India’s iconic airline brands
However, a year later, all hopes of a revival have eroded. Even though as many as 15 entities had shown interest over the past 12 months, no one has submitted a financial bid so far. The ongoing stress in the global aviation sector due to the travel restrictions imposed to combat Covid-19 has practically wiped out any remaining hopes of finding a new owner.
Before the virus hit the global economy, at least four attempts were made by the lenders. The first attempt was led by SBI which set May 10 ,2019 as the last date for submitting an expression of interest (EoI). But by then the airline had reduced its operations to only five flights. On April 5, Jet Airways’ fuel supplier cut off the company refusing to refuel their planes until they had been paid. To find a solution Jet’s senior management had called for a board meeting on April 17. Late evening, senior management executives were seen walking out of the airline’s headquarters in Mumbai, hanging their heads low, some, even sobbing. A decision was taken to shut down all domestic and international flights with immediate effect. Since no emergency funding was forthcoming, the airline was not be able to pay for fuel or other critical services to keep the operations going.
A consortium of minority shareholders of Jet Airways and four unions – Pilots, Technicians, Cabin Crew and others, made an audacious proposal to convert the debt – both financial and operational creditors – into equity.
Sankaran Raghunathan who was leading the consortium said they had sent a proposal to SBI Caps, which was appointed to evaluate a resolution plan for Jet on April 25, 2019. SBI wanted to wait till May 10, the last date for others to submit their EOI, before entertaining this proposal. “We submitted our proposal by email, however, SBI did not respond to us and invite us into this process,” he added.
But even then things looked positive as the lenders had got feelers from some credible investors including Etihad Airways; the Tata Group; AdiGroup; National Infrastructure and Investment Fund; and private equity firms Indigo Partners and TPG.
But on May 10 all hopes came down crashing when only Etihad submitted a conditional offer. In a statement, Etihad, , which already owned a 24 per cent stake in Jet, said that it cannot be expected to be the sole investor, and that, amongst other requirements, additional investors would need to bring in the bulk of the money required to recapitalize Jet.
“In essence Jet could only be revived if it was reset and rebooted, with fresh capital, management, governance and mindset. However, lenders saw it as a going concern that needed fresh capital alone. The gap in understanding the turnaround of an airline was too wide to bridge.” Sanjay Viswanathan, Chairman, AdiGroup told Businessline.
15/04/20 Forum Gandhi/Business Line
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“Little did I know that it would be the last time I’d be wearing this uniform officially. Little did I know that it would be the last time I was stepping into a 737 cockpit,” Kumar, a pilot with Jet Airways, wrote.
Exactly a year back, Kumar along with 25,000 other employees of Jet Airways were hopeful that the airline’s troubles with a debt of over Rs 14,000 crore would be over once the founder Naresh Goyal was asked to exit the company. The airline was taken over by the lenders led by the State Bank of India and a global hunt ensued to find a new owner for one of India’s iconic airline brands
However, a year later, all hopes of a revival have eroded. Even though as many as 15 entities had shown interest over the past 12 months, no one has submitted a financial bid so far. The ongoing stress in the global aviation sector due to the travel restrictions imposed to combat Covid-19 has practically wiped out any remaining hopes of finding a new owner.
Before the virus hit the global economy, at least four attempts were made by the lenders. The first attempt was led by SBI which set May 10 ,2019 as the last date for submitting an expression of interest (EoI). But by then the airline had reduced its operations to only five flights. On April 5, Jet Airways’ fuel supplier cut off the company refusing to refuel their planes until they had been paid. To find a solution Jet’s senior management had called for a board meeting on April 17. Late evening, senior management executives were seen walking out of the airline’s headquarters in Mumbai, hanging their heads low, some, even sobbing. A decision was taken to shut down all domestic and international flights with immediate effect. Since no emergency funding was forthcoming, the airline was not be able to pay for fuel or other critical services to keep the operations going.
A consortium of minority shareholders of Jet Airways and four unions – Pilots, Technicians, Cabin Crew and others, made an audacious proposal to convert the debt – both financial and operational creditors – into equity.
Sankaran Raghunathan who was leading the consortium said they had sent a proposal to SBI Caps, which was appointed to evaluate a resolution plan for Jet on April 25, 2019. SBI wanted to wait till May 10, the last date for others to submit their EOI, before entertaining this proposal. “We submitted our proposal by email, however, SBI did not respond to us and invite us into this process,” he added.
But even then things looked positive as the lenders had got feelers from some credible investors including Etihad Airways; the Tata Group; AdiGroup; National Infrastructure and Investment Fund; and private equity firms Indigo Partners and TPG.
But on May 10 all hopes came down crashing when only Etihad submitted a conditional offer. In a statement, Etihad, , which already owned a 24 per cent stake in Jet, said that it cannot be expected to be the sole investor, and that, amongst other requirements, additional investors would need to bring in the bulk of the money required to recapitalize Jet.
“In essence Jet could only be revived if it was reset and rebooted, with fresh capital, management, governance and mindset. However, lenders saw it as a going concern that needed fresh capital alone. The gap in understanding the turnaround of an airline was too wide to bridge.” Sanjay Viswanathan, Chairman, AdiGroup told Businessline.
15/04/20 Forum Gandhi/Business Line
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