New Delhi: The Jet Airways rescue deal is sufficient to return the airline to skies, but its new owners will need to quickly raise more capital to turn around the airline, bankers and industry experts said.
Lenders to Jet Airways (India) Ltd have accepted a Rs 1,000-crore bid by a consortium of UK-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan to revive and operate the airline that last flew on 17 April, 2019.
According to two bankers involved in the resolution process, lenders plan to discuss capital infusion plans with the new owners, after deciding on the initial payout to lenders from the first round of investment.
The winning bidders have proposed to restart Jet’s operations by April 2021, the bankers said on condition of anonymity.
“The resolution plan now needs approval from the National Company Law Tribunal (NCLT)”, reports Hindustan Times.
“An initial fund infusion of about Rs 1,000 crore is good enough to restart operations in a small way, with about 10 aircraft. However, it needs to be seen whether they can bring more capital after that,” the report quoted a person familiar with the matter as saying.
At present, various creditors of Jet Airways have a combined claim of over Rs 25,000 crore against the airline, which includes claims of over Rs 8,000 crore by financial creditors. However, financial creditors are expected to recover only a fraction of their dues.
As things stand, Jet Airways’ assets include its Air Operator Permit (AOP), a stake in a profitable frequent flyer program, few relatively old planes, including Boeing 777 and Airbus 330 aircraft, and brand value. /Do they own head office, intl hub, airport slots etc?
Challenges include its heavy debt and high costs of restarting operations, amid low travel demand due to the pandemic.
Air India facing a very challenging financial situation: Minister
New Delhi: Civil Aviation Minister Hardeep Puri has called Air India’s leave without pay (LWP) scheme a “win-win for employees and management”, and pointed out that Air India has not laid off a single employee even as international and domestic carriers have resorted to cost cutting through layoffs.
In a letter to Rajya Sabha MP Binoy Viswam, Puri provided clarification on Air India’s financial condition and the LWP scheme.
“Air India is also facing a very challenging financial situation,” Puri said adding the airline has taken recourse to several initiatives with a view to ensuring continuance of its operations.
Air India and its subsidiaries have paid the salary of June 2020 to its employees. He said that the airline industry worldwide is facing unprecedented financial crisis due to Covid-19.
Puri said the LWP scheme enables employees to take a break from their office responsibilities for a defined period of time with the approval of the Air India management while retaining their employment with the company.
The scheme also provides the opportunity to employees to take up alternative employment during the period of the leave with the approval of the management, he said.
“The LWP is a win-win situation for both the management and the employees as it provides flexibility to employees and simultaneously reduces the wage bill of the company,” Puri said.
“The Covid-19 outbreak has very seriously impacted the airline sector and currently the airline operations of the company have taken a serious hit,” he said.