Last week, a group of lenders approved a bid by a consortium for revival of Jet Airways, which has been grounded since April 2018 for lack of funds. This could be the first step in a possible turnaround of India’s oldest private airline.
Who are the new potential owners of Jet Airways?
Jet Airways’ creditors have approved a resolution plan submitted by a consortium of UK-based Kalrock Capital and UAE-based businessman Murari Lal Jalan.
Jalan was initially a paper trader who later diversified into various sectors such as real estate, mining, construction, FMCG, dairy, travel and tourism, and industrial works. He currently has investments in the UAE, India, Russia and Uzbekistan.
It is noteworthy that neither of the parties in the consortium have experience in managing a passenger airline.
So when is Jet Airways expected to start operations?
The next step is for the lenders to get an approval for the resolution plan from the National Company Law Tribunal (NCLT). Once the NCLT approval is in, the investors are ready to take the airline to the skies within six months, people in know of the matter have said.
However, things may not turn out to be quite as straightforward. The new investors are said to be looking at investing Rs 1,000 crore into Jet Airways, but it is unclear at this point whether the monies would be used towards repaying the creditors, vendors, employees, etc., or towards getting the airline back on its feet.
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What are the major concerns that have to be addressed before a potential revival of Jet Airways?
To begin with, the new investors will have to renegotiate contracts with various vendors including fuel retailers, aircraft lessors, caterers, etc., that will be crucial for flight operations.
Secondly, when Jet Airways was grounded in 2018, the slots that were under use by the airline were re-allocated to other domestic airlines by the government, given the severe crunch of available slots at key airports like Delhi and Mumbai. While it will be important for Jet Airways to get hold of some of its prime slots to ensure sustainable operations, it is unlikely that other domestic airlines will let go of the slots without a fight, given that they have invested in bringing in additional capacity to get those slots in the first place.
In what form is Jet Airways expected to restart?
The investors have laid out a plan to resume Jet Airways as a small airline in the beginning, for which they have begun negotiating with aircraft lessors.
Currently, the airline has 12 aircraft on its books — nine wide-bodied planes and three narrow-bodied Boeing 737s. While Jet Airways is expected to retain its iconic brand identity and its business model of being a full-service carrier, it is likely that in the first year of its operations, the airline will operate only domestically.
This is unless the investors opt for aggressive expansion, something that market players have ruled out for the time being given the global aviation industry scenario that has arisen as a result of the Covid-19 pandemic.
What happens to Jet Airways employees?
Even as the news of a resolution plan being approved by the lenders has caused some cheer among the staff of Jet Airways — which, at its peak, had around 17,000 employees — the new investors are yet to take a call on who will be retained.
In terms of human resources, it will be crucial for the investors to bring in a management with experience of running an airline in addition to people necessary for flight operations, such as crew, etc.
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