Jet Airways is officially making a comeback. Following the approval of the bankruptcy court, we now know more details about the carrier’s plans for a full restart later this year. Let’s find out more about Jet 2.0 and what to expect from the revived carrier.
Ready to go
In its order last week, the NCLT (National Company Law Tribunal) approved the Kalrock-Jalan consortium’s resolution plan for Jet Airways. The order sheds light on Jet’s new workforce, its slots at domestic airports, and the new shareholding structure of the carrier.
While there had been some hope for previous Jet Airways employees that they would find jobs with the revived airline, this has been dashed. Only 50 employees will be rehired by the carrier, and even their contracts will be freshly renegotiated.
Instead, all remaining employees (as of 15th September 2020) will get a one-time payment ₹11,000 ($148). Additionally, they may also claim medical expenses and school fees worth ₹5,100 ($68.7) each. All employees will also receive a ₹500 ($6.7) one-time mobile phone recharge, as stated in the official order.
Perhaps the most notable benefit for former employees will be a 76% stake in ground handling services company Airjet, giving them a controlling share. The employee trust will also own 0.5% of the newly revived Jet Airways. Overall, these payments are far lower than many hoped but have the potential to grow in the future.
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There has been much debate over the status of Jet Airways’ slots. This meant the government and DGCA’s decision to state that the carrier has lost all of its slots came as a huge blow. However, the NCLT has taken a gentler view of the situation, not mandating that slots be returned but pushing the government to ensure Jet receives at least some slots.
In the order, the court said,
“We trust that the authorities concerned including the Government of India shall take a holistic approach and provide necessary assistance to the Corporate Debtor [Jet Airways] in terms of the guidelines in allocation of slots as and when they are sought, so that the Airlines takes off the ground and possibly regain its lost glory.”
This will be a huge relief to the carrier’s new owners and will ensure that it can secure slots as key airports. As we’ve discussed before, Jet’s much smaller operations this time around will mean finding slots won’t be extremely challenging. However, the question of future expansion might become an issue in the coming years.
On the question of funding, the Kalrock-Jalan consortium will own 90% of the revived Jet Airways, investing a total of ₹1,375 crores ($184.8mn). Public shareholders will only receive one share for every hundred, while owners like Etihad will lose their preferential shareholding. Jet Airways’ creditors, to whom over $1 billion is owed, are taking a 95% haircut on their dues, but will receive ₹185 crores ($24.8mn) within six months.
Overall, the plan allows Jet Airways to return to the skies but offers few benefits to old stakeholders, as happens many a time.
What do you think about Jet Airways’ resolution plan? Let us know in the comments!