Jet Airways sale: As deadline nears, sign of a strong bidder yet to emerge

According to sources, while no bidder has come forward with any firm commitment so far, lenders have approached several international airlines and some Indian corporates. Speculation is rife that Etihad which owned 24 per cent stake in the airline is likely to put in a bid to take control of the airline. “The airline will find it difficult to weather the storm without fresh funding. Lessors will continue to take away aircraft as the airline has not been able to make payments to them,” said a source.

Explained: Want a stake in cash-strapped Jet Airways? What you need to know

Bankers said they are hopeful of some bidders emerging on April 10, the last day to submit the bids. What’s worrying aviation and banking circles is that the process of bringing in new investor or promoter is taking its own time. On top of that, funding will come only after lenders sign up with the bidder and all legal formalities are completed. The process is expected to be completed in the June quarter.

Jet Airways pilots along with engineers and senior executives have not been paid for the last three months amid cash-drought in the airline that saw an ownership change last month with banks taking majority shares. Along with these staff, the airline has defaulted on the payment of March salaries to other employees as well. “My client (NAG) calls upon the management of Jet Airways to pay their outstanding salaries for January, February and March, by April 14 (and future salaries by the first of every month) … failing which my client shall be constrained to resort to all constitutional and legal means available with them to ensure payment of their salaries,” NAG said in a legal notice.

Late March, the guild had warned of a “no flying call” from April 1 over the delayed salaries, which they had deferred to April 14. The banks have proposed to offer at least 3.54 crore shares of the airline comprising 31.2 per cent of equity share capital of the company and up to a maximum of 8.51 crore shares comprising 75 per cent of the share capital of Jet Airways. Potential buyers must submit their interest by April 10, SBICAPs said in the bid document. A strategic bidder should have a net worth of at least Rs 1,000 crore in the preceding financial year, or at least three years of experience in the airline business. Accumulated losses in over the last decade have resulted in Jet Airways delaying payments to banks, lessors and employees, leading to founder Naresh Goyal being forced to give up control of the carrier.

As part of the bailout plan worked out by the lenders, Naresh Goyal and his wife Anita Goyal and one nominee of Etihad Airways, Kevin Knight, have stepped down from the board. The airline will create appropriate security over the company’s assets for securing the existing facilities extended by the lenders and the proposed immediate funding support of up to Rs 1,500 crore by way of an appropriate debt instrument. The board has also decided to constitute an interim management committee to manage and monitor the daily operations and cashflow of the company which is hit by grounding of aircraft and cancellation of flights.