Some bidders for Jet Airways have confirmed that they are part of a large consortium of buyers is in talks with lenders to takeover the airline and rescue it from bankruptcy. Former Jet CEO Naresh Goyal and Etihad Airways are reportedly working with AdiGro Aviation and the Hinduja Group to bid for Jet.
Money Control reported that Etihad and Jet’s lenders, led by the State Bank of India (SBI), were already speaking to London-based AdiGro Aviation for an investment in the airline. Now, the Hinduja Group, too, has agreed to join the team.
There is no clarity on what this four-way investment will look like, but the bidders and lenders will be meeting in the coming weeks to hammer out the details.
Bidding process for Jet delayed
Prior to the Hindujas and AdiGro entering the conversation, Etihad was the only bidder lenders had confirmed.
The lenders were previously unhappy with the bids they’d got because they believed that no bidder was serious enough to revive the cash-strapped airline. TPC Capital, Indigo Partners, and Investment and Infrastructure Fund Ltd., were reportedly among the bidders who had submitted expressions of interest.
Etihad had also offered to bow out and sell off its equity to the lenders when the bidding process seemed too complex and tedious to see through. Etihad CEO Tony Douglas even met with SBI Chairman Rajnish Kumar in March to discuss Etihad’s exit.
However, Etihad has since decided to stay on as a 24% minority investor on the condition that the lenders take the sole responsibility of finding more bidders.
Etihad also offered a Rs 1,700 crore investment. However, Jet needs around Rs 8,000 crore to become fully operational again.
AdiGro was one of the unsolicited bidders that has now been invited into more serious talks. AdiGro founder and Chairman Sanjay Viswanathan expressed his interest in investing in Jet as a partner to Etihad even before the Hindujas joined.
“We have put in a binding bid to resurrect the airline. We have been in constant touch with Etihad. SBI and the lender group are quite receptive of the turnaround plan,” Viswanathan said to Business Line.
AdiGro added that it will contribute Rs 2,500 crore to restart Jet’s operations by July 1 with around 9,000 employees and 70 carriers. The firm has also proposed that the airline’s top management needs to take a 25% reduction in salaries, while its employees take a 10% cut.
The Hindujas, who are apparently close friends of the Goyals, expect the banks to take a haircut on Jet’s repayment.
The group has also previously tried to enter the Indian aviation sector, when Air India opened up for privatisation, says the Economic Times. It also collaborated with Lufthansa AirCargo’s services in India in the late 1990s.
Jet Airways’ shutdown and pilot protests
On April 17, Jet Airways announced that it was temporarily shutting down as it had proved unsuccessful in securing emergency funding from the lenders. Jet suspended its domestic and international flights—routes that competitor SpiceJet is snapping up.
Taking unhappily to the news, the airline’s pilots and staff protested in Mumbai and Delhi. Pilot unions even appealed to Prime Minister Narendra Modi to intervene and save them from unemployment.
The unions proposed buying out the airline through the employee stock option programme and staff salaries, bringing the offer to Rs 7,000 crore to be paid over five years. However, this figure is too low to fund the airline even in the interim.
Jet’s currently unemployed pilots have begun looking for jobs elsewhere. Reports say they have applied to Turkish Airlines, Korean Air, Qatar Airways, and Rwanda Air.
IndiGo, who has been struggling with a pilot shortage of late, has also hired 30 of Jet’s pilots. Tata-owned Taj Mahal Palace Hotels, too, has offered Jet’s crew jobs.
While there is more optimism surrounding Jet’s financial future, the bidders still need to do their due diligence; this means they will need to submit to financial audits.
Rhea Arora is a Staff Writer at Qrius.