As Jet Airways’ fund-raising plans fail to gain momentum from its existing investors, the government is keen on state-owned banks to keep the airline afloat rather than the company going under bankruptcy. A top government source said Tuesday that Jet’s lenders, led by State Bank of India, had the option of redeeming the shares pledged to them and sell it to recover their debt.
Further, even bankers are looking at options beyond bankruptcy. According to sources familiar with the matter, bankers have so far refused to take Jet Airways to National Company Law Tribunal (NCLT) for resolution under the Insolvency and Bankruptcy Code, as the government is keen to ensure that the airline does not go down under.
“We have studied a number of options. Detailed resolution/restructuring plans have been discussed. Ultimately, it is the lead lender — SBI — which will have to take a call, but it is clear going to NCLT is not the solution,” a senior PSU banker having loan exposure to the airline said. Last month, shareholders of Jet Airways cleared conversion of loan into shares and other proposals. On February 14 , Jet Airways’ board approved a Bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become largest shareholders in airline. Following approval from the shareholders, part of debt would be converted into 11.4 crore shares at a consideration of Re 1 apiece as per RBI norms.
A senior government official aware of Jet Airways’ plans said that while in a scenario where market forces are left free it was healthy if an airline or an airport went bust, there were 17,000 jobs associated with the airline. The official, however, denied government playing a role in Jet Airways’ resolution. “The government only comes into the picture if there is a question of FDI rules,” he said.
On Monday, the airline said its payment of interest due on March 19 to debenture holders will be delayed owing to temporary liquidity constraints. The government source cited above pointed out that the Centre was in favour of an Indian entity holding a majority stake in Jet. Prevalent FDI norms prohibit foreign carriers from having substantial ownership or effective control of an Indian airline.