“There is light at the end of the tunnel “. Well, this famous proverb fits well in case of once India’s prized airlines Jet Airways, which got some hope for its revival after Committee of Creditors ( CoC) approved the resolution plan submitted by Murali Lal Jalan and Florian Fritsch under Section 30(4) of the Code as the successful resolution plan.
This has not only saved the airlines from nose diving and becoming an ill-doted history but a sigh of relief on the face of 20,000 employees and more than 60,000 people indirectly associated with Jet Airways.
The journey ahead is still tough as the new owners have to take care of debt in tune of more than Rs 8,000 crore to banks, with public sector lenders having significant exposure. However, claims made by financial creditors, operational creditors, and employees have ballooned to over Rs 40,000 crore, out of which claims to the tune of Rs 15,525 crore has been admitted by the resolution professional. Financial creditors such as State Bank of India, Yes Bank, and others have claimed Rs 11,344 crore but only Rs 7,459. 80 crore has been admitted.
It was marked a black day in the history of Indian aviation when on 17th April of 2019.Jet Airways ceased its domestic operations after its last flight between Amritsar-Mumbai. It has terminated its international flights much before as the lenders turned down its demand for any emergency funding.
The National Company Law Tribunal (NCLT) on June 20, 2019, admitted the insolvency petition filed by the lenders’ consortium led by State Bank of India against Jet Airways. The insolvency process for Jet Airways was supposed to be completed by June this year and the deadline was first extended to August 21, due to lockdown curbs, and then extended for an unspecified time.
It’s been 18 months since Jet Airways last operated, CoC met 16 times to finalize a bidder and finally consortium lead by Murali Lal Jalan and Florian Fritsch of Kalrock Capital has been duly approved to restart the airlines. The consortium had placed a bid of nearly Rs.1,000 crore. Over 97 per cent of CoC have voted in favour of the resolution plan submitted by the Kalrock consortium.
After CoC approval, Kalrock Capital led consortium will now have to get the plan approved by the National Company Law Tribunal (NCLT). Upon receiving the NCLT approval, they would need to apply to civil aviation ministry and corporate affairs ministry for their approvals, respectively.
Following the norms of the Insolvency and Bankruptcy Code, Kalrock Capital-Murari Lal Jalan consortium deposited the performance security of approximately Rs150 crore ahead of the deadline of November 3. This amount is to bind the party in a bond and to ensure that the bidder doesn’t withdraw its plan later. Along with this, if the winning bidder is unable to execute the proposed plan, the amount is forfeited.
THE EXACT DEAL & WAY AHEAD
The new owner of Jet Airways, Kalrock Capital and Jalan consortium had placed a bid of nearly Rs 1,000 crore. The lenders will also get 9.5 per cent of equity in Jet Airways along with 7.5 per cent equity in loyalty rewards company InterMiles (formerly Jet Privilege). The Resolution Professional appointed by CoC,Ashish Chhawcharria will now have to submit the resolution plan before the NCLT. Once the plan gets approved by the NCLT, the bidders will then have to get approvals from the Ministry of Civil Aviation for Air operators Permit( AoP) and slot allocation.
OPERATIONAL CHALLENGES
At the time of its last operations, Jet Airways had a fleet of nearly 120 aircraft with new orders to acquire up to 225 Boeing 737 Max aircraft by late 2018. At present, it has only 12 aircrafts including Boeing 777, Boeing 737 and Airbus A330 planes. Experts believes that at present with curtail in both domestic and international routes, it will be good for the new operators to start with domestic routes first. Also, it’s been speculated that the actual operations of jet Airways might start from April 2021 onwards.
ABOUT THE NEW OWNERS
KALROCK CAPITAL
London-based Kalrock Capital is a global firm owned by Florian Fritsch operating in financial advisory and alternative asset management, managing significant partners’ assets across a number of clearly defined and diversified strategies and single investments, with focus on private markets. The firm is primarily active in three verticals, Real Estate, Venture Capital and Special Situations.
MURARI LAL JALAN
Murari Lal Jalan is a UAE based entrepreneur and has investments in several sectors like real estate, mining, trading, construction, fast-moving consumer goods, dairy, travel & tourism and industrial works globally, according to reports.
Quote:
“We are delighted to hear such reports, and we remain committed to Jet Airways. Jet Airways is a renowned Indian aviation company with a strong legacy. The aviation sector underwent substantial correction on account of Covid-19 and created an opportune time to enter the sector. Our vision for Jet Airways is to operate the carrier as a full-service airline, both domestic and international.”
BOX ITEM:
SERIES OF STEPS FOR JET AIRWAYS RESOLUTION
April 2019: Jet shuts ceases its domestic operations
June: SBI takes Jet to NCLT
September: Synergy Group expresses but fails to give a plan
January 2020: Resolution Professionals calls for fresh EoIs
February: 3 suitors express interest but fail to give resolution plan
March: RP asks for 3 months extension in CIRP of Jet from NCLT
April: Jet gets CIRP extension till August 21
May: Lenders receive 12 fresh EoIs out of which 4 withdraws
July: Finally 2 bidders give a final resolution plan
September: Bidders make changes to their plans post discussion with lenders
October: Voting concluded on 16th October
17th October: CoC picked Kalrock Capital-Murari Lal Jalan consortium with over 97 per cent voted in favour.
