Jet Airways Revival Plans Hit Rough Weather

Jet Airways revival plans hit rough weather as potential investors are concerned about losing plum slots and routes.

- Nachiket Kelkar

When a consortium of lenders nudged out Naresh Goyal from the debt-ridden Jet Airways on March 25 to gain control of the airline, the expectation was that they would immediately inject 1,500 crore that the airline desperately needed to keep flying. Simultaneously, a search was on for a new investor. It seemed like there was light at the end of the tunnel.

However, much of the emergency funds never came. Jet already had a debt of around 8,500 crore, and lenders were wary of throwing good money after bad. They chose to focus on the planned stake sale, offering as much as a 75 per cent stake in the airline in the hope of saving it from bankruptcy.

It was, perhaps, too little too late, as Jet had a hard landing on April 18, leaving around 20,000 employees high and dry. Many of them had not been paid for three months.

Four entities have shown interest in picking up a stake in the airline—Abu Dhabi-based Etihad Airlines, which held 24 per cent stake in Jet, private equity firms TPG Capital and Indigo Partners, and the National Investment and Infrastructure Fund. However, whether the lenders will get any firm bids at all is uncertain now, given the grounding of the airline. The Directorate General of Civil Aviation (DGCA) has started allocating slots formerly held by Jet to other airlines. Jet’s grounding has opened up more than 400 slots at various airports.

The reallocation of slots, which is said to be temporary, will benefit Indigo, India’s largest domestic carrier, and SpiceJet. Both have announced several new flights connecting Mumbai and Delhi.