Jet Airways crisis: Lenders keen on non-IBC resolution in case bidding process fails

New Delhi, April 21 (PTI): As they explore ways to recover debt, lenders of Jet Airways are in favour of a resolution outside the insolvency law framework in case the ongoing bidding process fails to take off, sources said. Running into debt of more than INR 8,500 crore, Jet Airways has shut down operations temporarily after lenders decided against extending emergency funds for its survival. SBI, the lead lender of the seven-member consortium of domestic banks that have extended loans to the airline, has started the bidding process for stake sale in the carrier and clarity about potential bidders would emerge next month. While lenders are “reasonably hopeful” of a successful bidding process, sources said banks are working on a plan B in case things don’t progress as expected. If the bidding process fails, lenders would favour a resolution for the debt-ridden Jet Airways outside the Insolvency and Bankruptcy Code (IBC) framework, sources said. Recovery on the basis of existing security and tangible assets would be a preferred option, they added. Under the Code, the National Company Law Tribunal’s (NCLT) approval is required for initiating the process, wherein the resolution would be market-linked and time-bound. Outside the NCLT would be a better option as far as plan B is concerned, sources said, adding that then banks would realise better value from the aircraft and other tangible assets owned by Jet Airways. Four entities -- Etihad Airways, TPG Capital, Indigo Partners and National Investment and Infrastructure Fund (NIIF) -- are learnt to have shown interest in picking up stake in Jet Airways. The details of initial bidders are expected to be known on May 10. As they wait for completion of the bidding process, the lenders are also looking at options to raise funds from the carrier’s available assets, including utilising Jet Airways’ 16 own planes. On Friday, sources said that lenders have been proactive and cannot be blamed for the current situation at the airline. “They (lenders) have been actively engaging with the company for almost nine months ever since the airline started incurring cash losses and have been urging the management to come forward with a definite plan for resolution.” “Unfortunately, the management and the promoter delayed in taking a decision leading to the present situation. The lenders continued to support the airline during this period,” one of the sources had said. Air India Express mulls leasing some Jet Airways’ Boeing 737s Air India Express, the international budget arm of Air India, is examining the possibility of leasing some Boeing 737 aircraft of grounded carrier Jet Airways, which are parked at different airports due to non-payment, through a firm decision is yet to be taken, a top company official said Sunday. Before halting operations temporarily mid-last week due to severe cash-drought, the private carrier was forced to ground 69 planes owing to non-payment of rentals to lessors. Later, on April 16, it grounded the rest of the planes in its fleet, when it decided to temporarily suspend all its domestic and international services. Air India Express parent, Air India, is already discussing a proposal to lease five of Jet Airways wide-body planes, Boeing 777s. “We are looking at leasing (B737 of Jet Airways) aircraft but there is no firm decision on this issue so far. As a matter-of-fact, there are a lot of other things that have to be looked at, like slots, sectors and timings, among others,” Air India Express chief executive officer Shyam K Sunder told PTI over phone from Kochi, the airline’s headquarter. When asked about the number of planes that his airline could induct from Jet Airways, he said, “We don’t have a target number.” Air India Express, has its operations largely out of Kerala to the Gulf and South-east Asia. Besides, it also operates some flights to these regions from North and Western India as well as on some domestic routes. It has a fleet of 25 Boeing 737 planes, of which 17 are owned and rest 18 are on lease. The now out-of operations, Jet Airways also has B737s in the fleet. Shyam Sunder also said the airline plans to recruit 50 commanders from Jet Airways, of which 20 have already been hired. “We have already recruited a lot of pilots. We have about 20 of them already, all from Jet Airways as at present only Jet pilots are available in the market. Our intention is hire up to 50 pilots. So we will be inducting another 25-30 pilots going forward,” he said.