Friday, September 24, 2021

Why Akasa casts a shadow on Jet Airways revival

“I have been asking this question since day one. What is left to revive except huge debts”, says Suresh Nair, former Jet Airways employee and an aviation industry veteran. Nair joined Jet Airways from Cathay Pacific in February 1996 as general manager for North India, Nepal and Pakistan—when the airline had only 6 aircraft and Delhi was the only online station in North India. The CEO back then was Nikos Kardassis, and Nair worked very clearly with him to set up ten stations in North India (including Srinagar, Jammu, Lucknow, Chandigarh among others).

Nair is not the only ex-Jet personnel to ask this question. Ever since the story of Jet’s imminent revival has floated, many in the aviation sector—both in the airlines and former and present ministry of civil aviation (MoCA) officials—remain unconvinced that this revival will ever see the light of day, even though many would be happy to see their once “beloved” logo back in the skies.

But a majority of those in the aviation sector including top-level CEOs, CCOs—both of Jet and rival airlines—top former Jet management and commanders, and even senior government officials do not buy this and have never been convinced that there was a serious revival effort afoot. Top secretary-level phone calls have been made to airline chiefs asking “who this is and what’s going on” almost since the story began to gather momentum. “If those who oversee giving the clearances to the new combine are clueless, it’s almost impossible for anyone to take the revival seriously,” says a former MoCA secretary.

Besides those who are ostensibly involved in the revival effort—including Ashish Chhawchharia (resolution professional for Jet Airways) and Murari Lal Jalan and the Kalrock consortium—there does remain a small subset of industry sources who maintained that the airline would fly again. To quote one, CAPA India head and CEO Kapil Kaul said that he expects “Jet to restart operations sometime in early 2022”, closer to April.

A bit like an ocean tide, the Jet revival story ebbs and surges in the media. For the last few months—ever since the news of a new airline Akasa to be launched hit the headlines—Murari Lal Jalan and the Kalrock Capital consortium appear to have lost favour. Unlike some months ago, when the revival of Jet was suggested as “imminent”—once Akasa surfaced—it no longer appears to be the flavour of the season. Many reports highlight all the reasons why it might not take off as they were earlier proclaiming. But of late, reports of revival have resurfaced, and it is now argued that the airline will take to the skies by early 2022, leaving the industry further mystified.

One of the former CEOs said that a minimum of $200 million would be needed to revive, Jet as per his estimation. “There’s no guarantee on slots or traffic rights and the new owners inherit a lot of baggage”, he argues. He expects a “huge reluctance from leasing companies” to lease aircraft to “an entity where they have previously lost money in a market as troubled as India”. One former CFO of the airline—when asked by this writer on what he makes of this Jet revival—answered in two letters “BS” (bullshit), refusing to be drawn into any further discussion on the matter. A former commander, Sam Thomas, said that the revival in 2022 looks "impossible" and that PNB had done the right thing by asking to quash the NCLAT order.

Why then is the Ministry of Civil Aviation not debunking the Jet revival when it too knows “only too well” that there is no value left to revive. “The airline only has liabilities as far as I know, so I am unable to understand precisely what this revival means. Why would anyone be so keen to revive; if they have money to burn, they could just start a new airline as Jhunjhunwala and Co are doing”, argues a former Jet CFO.

Industry sources suspect that the revival theory has been floated by market movers who may have some interest in selling or getting rid of the stock of the airline and reducing the losses as the airline’s share became almost junk post the shutdown. “These rumours are floated from time to time to bolster the share price and allow some players to recoup some of their losses. It’s nothing more than market manipulation”, says a former CFO of Jet. He says that some investors will be left richer and some poorer but that’s all that will happen as a result of these rumours.

24/09/21 Anjuli Bhargava/Fortune India

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