MIAMI – Indian carrier Jet Airways (9W) creditor board has approved a resolution plan for the revival of the bankrupt airline.
The carrier sees in its board the UK-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan, who depicted the action as a way to make the carrier’s debt sustainable and kickstart the process to relaunch the Indian carrier in the future.
A Quick Look at Jet Airways’ History
Jet Airways had accumulated a large debt to banks, roughly Rs80bn (US$1.08bn). The financial entities claimed Rs15,525 crore was admitted by the resolution.
Other financial creditors such as State Bank of India, Yes Bank claimed Rs11,344 crore but have received only Rs7,459. After this, 9W ceased its operations on April 17, 2019, and submitted the application for the insolvency proceedings via the National Company Law Tribunal (NCLT) in June last year.
The process, after the aforementioned date, took long and in order to come up with a deal, the board met 16 times to decide the proper actions, postponing the deadline beyond August 21 for the insolvency resolution process amid the coronavirus pandemic.
Investors For Jet Airways Relaunch
After April 17, 2019, many investors have submitted purchase offers in order to buy the airline in economic distress for its relaunch. The most significant offers came from Kalrock Capital and Jalan, Haryana-based Flight Simulation Technique Centre, Mumbai-based Big Charter, and Abu Dhabi’s Imperial Capital Investments.
A big concern, as well, has been raised in relation to the actual situation incumbent on Indian airlines, which are much weaker now and running high losses due to the drastic fall in passenger traffic.
With only two airlines Air India (AI) and Vistara (V7) offering a business class service, there could be an opportunity to grab a market share in premium traffic. It is not, however, clear how the new owners would like to position the airline.
Karlrock Jalan Consortium Offers
Out of the aforementioned investors, the most promising offer has been that of Kalrock consortium, as stated by a senior executive involved in the process, who said, “The offer by Kalrock consortium was very close to liquidation value. But, we had voted to keep the company as a going concern.”
The Kalrock-Murari Lal Jalan tandem was pitted against the Imperial Capital-FSTC consortium, which is also setting up another airline in India called Fly Big.
The startup airline has been awarded routes under the government’s regional connectivity scheme (Udan) and hopes to start operations on Udan and non-Udan routes starting next month. Initially Fly Big aims to have a fleet of six ATR aircraft.
Approval of the Resolution
According to the documents received by Airways, 9W’s CoC, on October 18, 2020, finally approved Kalrock Consortium to step in and manage the re-birth of the Indian carrier.
Eighteen months after it shut down and sixteen months after it became the first airline company to be admitted under insolvency and bankruptcy code (IBC), 9W is finally set to make a comeback, albeit with a new owner – Kalrock Capital and Murari Lal Jalan.
The resolution plan of the consortium of Kalrock Capital–Murari Lal Jalan has been approved by the committee of creditors as e-voting of the lenders concluded on Saturday.
“The e-voting concluded today, i.e October 17, 2020, and the resolution plan submitted by Murari Lal Jalan and Florian Fritsch has been duly approved by the CoC under section 30 (4) of the code as the successful resolution plan,” the resolution professional said in an exchange notification.
Featured image: A333 9W Approaching 33L YYZ Photo: Getty Image