The fate of Jet Airways' Boeing 777 airplanes remains uncertain as the winning bidder has moved India's National Company Law Tribunal (NCLT) to expedite the sale of the planes. Jet Airways is currently resolving financial issues of its past and is trying to negotiate deals with lenders and former employees in order to start operations again. Its new owners wanted to resurrect the airline this year itself, but that deadline has clearly shifted now.

Three 777s

Malta-based Ace Aviation VIII Limited has applied to seek possession of three Boeing 777 airplanes belonging to Jet Airways as part of its bidding process.

The planes were put up for auction, and Ace Aviation VIII Limited was the winning bidder of the aircraft. A letter of intent was issued to the firm, which paid a $4.6 million deposit money to claim the airplanes. It also paid $1 million to be a part of the auction for two other 777s.

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The Business Standard reports that the firm received a mail from Jet on November 11th, which said that the sale process has been delayed and will resume in the next 60-90 days. The report also quotes from Ace Aviation's application letter, which states,

“The decision to keep the sale process in abeyance for an extended period for up to 60-90 days approximately provides no specific time limit to the auction and sale process and accordingly gives no assurance to the applicants…Furthermore, extending the time-limit without any reason whatsoever is arbitrary and contrary to commercially reasonable and prudent standards. Moreover, on each day of delay, the assets are depreciating in value…”

Plans in limbo

The reason behind Jet's decision to postpone the sale of the 777s is the conflict between its new owners, the Jalan-Kalrock consortium, and its lenders and ex-employees.

An airline union is trying to stop the sale of these aircraft until Jet clears its former employees' provident fund and gratuity dues. Jet's team has been discussing the source of these payments, with the airline insisting that the cost should be shared between the airline and the lenders. The banks – which have already taken a 95% haircut – do not want to take on any additional financial burden and want Jet to take full ownership of clearing employee dues.

According to Jet's resolution plan, the ₹4.7 billion set aside for repayment includes ₹3.8 billion ($46 million) for creditors and the remaining ₹52 million ($6.3 million) for employee repayment. The current ex-employee liabilities, as estimated by the authorities, are far more than Jet had provisioned for.

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The Mumbai bench of the NCLT will conduct another hearing on Wednesday, and further course of action will hopefully be decided after that.

What do you feel about Jet Airways' current situation? When do you think the airline will finally start operations? Please leave your comments below.

Source: Business Standard