Jet Airways revival bid hits a snag
The Rs10 billion Jet Airways revival plan submitted by a consortium of UAE based businessman and Kalrock Capital is facing an unexpected hurdle with the grounded airline’s employees union demanding it be made a party to the debt-resolution process.
Jet Aircraft Maintenance Engineers Welfare Association (JAMEWA) has filed an interlocutory application with the Mumbai Bench of the National Company Law Tribunal (NCLT) seeking a role in the revival process, according to Businessline.
The debt-ridden Jet Airways, India’s largest private sector airline with 16,000 employees, was forced to stop operations in April 2019 and was admitted in NCLT, through a case filed by its lenders in June. UAE’s national carrier Etihad Airways holds 24 per cent stake in the Indian carrier.
The union has submitted the application to Ashish Chhawcharria, the Resolution Professional and his advocates from AZB law firm, asking for a copy of the offer made by the Jalan-Kalrock combine, the report said. “The union has alleged that the resolution plan submitted by the Murarilal Jalan and Kalrock Capital consortium has illegalities and, therefore, the plan has not been shared with the employees despite repeated requests made to the Resolution Professional managing Jet Airways.”
In June, JAMEWA along with the Society for Welfare of Indian Pilots joined hands with AdiGroup to bid for 75 per cent in the airline through the NCLT process. A part of the London-based AdiGroup, AdiGro Aviation had offered to invest Rs25 billion for 24.9 per cent stake in Jet Airways, as a part of the talks that involved Etihad Airways and Hinduja Group to revive the Indian airline.
As per the plan submitted by the Jalan-led consortium, the investors would infuse Rs3.8 billion in phases in the first two years after the re-launch of the airline and follow it up with an additional Rs5.8 billion over the next three to five years. Lenders to the embattled carrier will get 9.5 per cent and 7.5 per cent stake respectively in the airline and its passenger miles company after subjecting to a 90 per cent haircut on their loan exposure. Financial creditors will also reportedly get 10 per cent free cash flows.
The consortium plans to commence operations with six aircraft domestically, then adding one aircraft each month, and plans to expand the fleet to 120 aircraft in five years. Currently, the airline has 12 aircraft on its books — nine wide-bodied planes and three narrow-bodied Boeing 737s.
Jalan is an entrepreneur with investments in the UAE, India, Russia and Uzbekistan among others. Jalan‘s flagship construction company MJ Developers is based in Dubai. He has interests in real estate and infrastructure, construction, FMCG, dairy, travel and tourism, and industrial works. In India, his investments include a major share of Agio Paper Industries, stakes in Medanta super specialty hospitals and Patanjali India Distribution.