Jet Airways, grounded since 2019, took a step closer to revival on Tuesday after a bankruptcy court approved the insolvency resolution plan submitted by Kalrock Capital and Dubai-based entrepreneur Murari Lal Jalan.
The Mumbai bench of the National Company Law Tribunal (NCLT)directed the Jalan-Kalrock consortium to get the required approval and licences to restart the airline within 90 days. The court rejected pleas by lawyers representing the ministry of civil aviation (MoCA) and the Directorate General of Civil Aviation (DGCA) against the approval. DGCA and MoCA had earlier said that the consortium cannot claim historicity on slots that were held by Jet before its bankruptcy. The slots were later distributed to other airlines.
Before its grounding, Jet Airways, once India’s largest private airline, held prime slots at major domestic airports, including Delhi and Mumbai. Since being declared the winning bidder, the Jalan-Kalrock consortium has maintained that it has a natural right to the prized slots, without which the chances of Jet’s revival could suffer.
Lawyers representing MoCA and DGCA have, however, argued that though the allocation of Jet’s slots to other airlines was temporary, withdrawing those in favour of Jet is not tenable. “The NCLT order is a massive cleanup and will allow new promoters to develop a viable business case subject to a significant capitalisation,” said Kapil Kaul, chief executive officer, Indian Subcontinent and the Middle East at aviation consultant CAPA.
The insolvency plea against the airline, filed by the lenders’ consortium led by State Bank of India, was admitted by NCLT in June 2019, two months after it was grounded.
The committee of creditors (CoC) approved the resolution plan submitted by the Jalan-Kalrock consortium in October 2020. The consortium proposes to invest ₹600 crore in the first two years to repay creditors and acquire an 89.79% stake in the carrier.
It also proposes to sell existing non-core assets such as realty and luxury cars by the end of the first year and said it will repay ₹131 crore, ₹193 crore, ₹259 crore at the end of the third, fourth and fifth years, respectively, to financial creditors from the airline’s cash flows. Overall, the consortium hopes to repay ₹1,183 crore to creditors over five years, which would include collections from asset sale proceeds and cash flows. In a February interview, Jalan said that the consortium had raised the required funds to turn around the airline without divulging specific details.
“We are prepared with the capital requirement plan for the next couple of years,” Jalan said.
Jet Airways would remain listed, and restarting operations would take an additional four to six months after getting approval from the NCLT, he said.
The new promoters will also retain the ‘Jet Airways’ brand and will resume operations with about 25 aircraft, with a base in New Delhi, and restart international flights by the end of this year, Jalan had said.