The Jet Airways resolution process has hit a snag after lenders invited bids to takeover the airline. Although over five companies have bid for the airline, lenders are extending the deadline because they want Etihad to put up more money towards Jet.
In the meantime, the Indian Oil Corporation (IOC) had stopped its fuel supply, briefly; also, aircraft in the fleet continue to be grounded.
Although expressions of interest (EoIs) are not binding, lenders are concerned that the existing bids do not display a serious intent to rehabilitate the airline for the long term.
The State Bank of India (SBI) and other lenders have decided to extend the deadline for bids for Jet Airways by two days, hoping that Etihad will submit an EoI in taking over the airline; 75% of the airline is up for grabs.
A spokesperson for SBI said some bidders have asked for additional time to submit an EoI.
“Accordingly, to allow better participation in the process, the domestic lenders have agreed to extend the timeline for submission of EoIs, which have been updated and made available on the websites,” they said.
Although there is no official confirmation of who the bidders are, Mint reported that Etihad, TPG Capital and Indigo Partners, and Investment and Infrastructure Fund Ltd. are a part of the process. It also said the lenders are waiting for Air Canada and Delta Airlines to submit EoIs.
None of these companies have commented.
The lenders have been trying to renew Etihad’s interest in the cash-strapped airline. However, Etihad wants to be exempt from a clause that says investors need to make an open offer for a 20% stake if they already own 25%.
Etihad currently owns 24% of Jet.
Qrius had previously reported that the Tata Group likely had an interest in investing in Jet. However, the Economic Times suggests that the company already has its hands full with Vistara and AirAsia India and does not want to invest in a third airline.
IOC resumes fuel supply, but aircraft grounded
Logistical problems compound as Jet’s lenders have not released the Rs 1,500 crore emergency funding as previously promised.
On April 6, the IOC had stopped its fuel supply, saying the airline had not cleared its dues. However, as of April 10, Wednesday, around 8:30 pm, IOC had resumed supply.
An IOC spokesperson told the Times of India that after lenders paid Rs 33 crore as an emergency loan on behalf of Jet, the company resumed the oil supply.
Jet Airways aircraft continue to be grounded. On Wednesday, a Jet carrier scheduled to fly from Amsterdam to Mumbai was seized at Schiphol Airport for not paying its dues. The Boeing 777 was a cargo agent for flight 93 321 that has also been cancelled.
Passengers booked on that flight were stuck in Amsterdam. Singapore’s Changi Airport announced earlier today that Jet has suspended its 9W services from Singapore until further notice.
In general, the airline has already warned its customers about changes in flight schedules because of “operational reasons”. It has been offering re-accommodation or a full refund. Only 115 Jet planes are currently operational.
In 2017, 124 were flying. The Directorate General of Civil Aviation has also approved the de-registration of seven grounded Boeing 737s.
Jet’s turbulent past and debt resolution
Despite being the country’s largest airline, Jet Airways defaulted on loan payments worth thousands of crores. It airline was even unable to pay staff salaries and its pilot crew threatened to strike.
As the debt resolution process unfolded, Naresh and Anita Goyal, the airline’s founders, were asked to step down from their positions on the board of directors. This was one of the major points of contention in the negotiation process because Naresh Goyal was unwilling to relinquish control of the airline.
He has now resigned from his position, stating that doing so is in the best interest of the company. He still retains a small 10% share in the airline.
Although the debt resolution process is slow, the lenders seem to be making progress, even if in baby steps. Lenders expect more bids for Jet in the next two days.
Rhea Arora is a Staff Writer at Qrius.