Now Jet Airways Employees Are Trying To Save The Carrier

India’s Jet Airways is the airline that refuses to die. Just when you thought Jet Airways was dead and buried, a Jet Airways employee consortium has teamed up with the UK’s adi Group in a joint venture to bid for 75% of the bankrupt airline.

A report in ch-aviation calls it a “last ditch attempt to save the airline from total collapse.” All that remains of the once second largest airline in India are five jets still at its base in Mumbai, and a tarnished brand.

jet airways employee bid
Former Jet Airways’ employees are after 26% of the now bankrupt airline. Photo: Wikimedia Commons

The carrier is moving through a formal bankruptcy process. Last month the State Bank of India presented an insolvency petition on behalf of 26 lenders to the National Company Law Tribunal (NCLT) in Mumbai. Jet Airways’ total debts are uncertain but are estimated to be in excess of USD$1 billion.

Ashwani Tyagi, a former senior Captain with Jet Airways and a driving force behind the employee consortium called the bid, “a challenging yet exciting journey to revive Jet Airways.” 

Featured Video:

The employee consortium will take a 26% interest in Jet Airways and adi Group will take a 49% interest (the maximum permissible for a foreign investor in India).

The National Company Law Tribunal is the Indian Government’s new judicial body that handles company insolvencies. Reform of the Indian bankruptcy code has been a big achievement for the current Indian Government.

Prior to the reforms, the insolvency process in India had a notorious reputation. The Jet Airways insolvency is very much a test case for the NCLT and the legislation.

Vocal employees

Employees have been vocal ever since Jet Airways ceased operations in April 2019.

Amongst other things, they have been concerned about their employee entitlements. At the time, an employee group wrote to the State Bank of India stating it could raise around USD$1 billion in funding. The bank, Jet Airways’ largest creditor, did not treat the offer as a viable one.

jet airways employee bid
All that remains of Jet Airways are five planes in Mumbai and a tarnished brand. Photo: Wikimedia Commons

The employee consortium does not represent all of the former 10,000 Jet Airways employees. Amongst others, the pilot’s union is not a part. The employee consortium would be expected to contribute at least USD$100 million towards the bid, an ambitious ask given Jet Airways’ salaries have not been paid since January 2019.

As a  probable solution to that problem, The Hindu reports that the employee consortium and adi Group has asked the NCLT to release enough frozen funds to the employees in the form of salaries owed. This would be redirected towards funding the bid. 

The NCLT is yet to agree to do so.

adi Group is confident

adi Group’s Chairman,  Sanjay Viswanathan, is upbeat if vague about funding. He estimates up to USD$700m will be needed in order to fund the bid, although that amount remains uncertain until a full picture of Jet Airways’ liabilities emerge. 

Given that Jet Airways staggered through its last months of operations, lurching from one crisis to another, the creditor’s list could be bigger than predicted.

jet airways employee bid
Will you ever see another Jet Airways’ plane touching down again? Photo: Nicky Boogaard via Flickr

But he and the employees consortium have a little time up their sleeves.

Creditors have until the end of July to submit their claims to the NCLT. When the full extent of the liabilities are established, a creditors committee will ask for expressions of interest from interested bidders like the adi Group – Jet Airways’ employee consortium joint venture. The bid must be approved by the committee and signed off on by the NCLT.

While this latest move by adi Group and the employees consortium has garnered headlines, it has yet to be formally tested. The new bankruptcy laws in India and the NCLT itself are still ironing out some problems, but it is unlikely the court will sign off on any bid for the remains of Jet Airways without ensuring there is the financing and resources to back that bid up.

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like