Jet Airways’ lenders keen on non-IBC route if bidding fails

Jet Airways, shares, NSE
Jet Airways stopped operations on April 17 due to acute financial distress.

As they explore ways to recover debt, lenders of Jet Airways are in favour of a resolution outside the insolvency law framework in case the ongoing bidding process fails to take off, sources said. Running into debt of more than ₹8,500 crore, Jet Airways has shut down operations temporarily after lenders decided against extending emergency funds for its survival. SBI, the lead lender of the seven-member consortium of domestic banks that have extended loans to the airline, has started the bidding process for stake sale in the carrier and clarity about potential bidders would emerge next month.

While lenders are reasonably hopeful of a successful bidding process, sources said banks are working on a plan B in case things do not progress as expected. If the bidding process fails, lenders would favour a resolution for the debt-ridden Jet Airways outside the Insolvency and Bankruptcy Code (IBC) framework, sources said. Recovery on the basis of existing security and tangible assets would be a preferred option, they added.

Under the Code, the National Company Law Tribunal (NCLT) approval is required for initiating the process, wherein the resolution would be market-linked and time-bound. Outside the NCLT would be a better option as far as plan B is concerned, sources said, adding that then banks would realise better value from the aircraft and other tangible assets owned by Jet Airways.

Four entities — Etihad Airways, TPG Capital, Indigo Partners and National Investment and Infrastructure Fund (NIIF) — are learnt to have shown interest in picking up stake in Jet Airways. The details of initial bidders are expected to be known on May 10.

Employees’ concern

Thousands of employees at the now-shuttered Jet Airways might be staring at an uncertain future but other airlines will see value in hiring such experienced people even though they might end up getting relatively lower pay packets, according to HR experts. Demand continues to outstrip talent supply in the Indian aviation sector, which is one of the fastest growing in the world. Cash-starved Jet Airways, which has been flying for nearly 26 years, has around 23,000 employees, including contractual staff. Experts observed that employees would have been under stress at the airline for a while, though quite a few would have been hopeful of a turnaround of the carrier. Under the current circumstances, they might have to either shift base to Tier-II or Tier-III cities or accept job offers having lower compensation, they opined. Staffing firm TeamLease Services Co-Founder and Executive Vice President Rituparna Chakraborty said that the aviation sector in India had immense potential and if one goes by the current equation, the supply of ground staff, crew and pilots are still low in comparison to the demand that exists. In my mind, other airlines will definitely see value in hiring the experienced and highly well-trained staff that Jet has currently; she said.

Executive search company GlobalHunt Managing Director Sunil Goel said there had been a huge expansion in terms of new airports and connectivity in Tier-II and Tier-III cities through air transportation. So, there is a consistent demand for talent in the aviation sector, he added.

Besides, the aviation sector on a high growth trajectory, there is also intense competition among domestic airlines.Jet Airways’ lenders keen on non-IBC route if bidding fails