Jet Airways CEO confirms temporary pay cuts and leave without pay amid hints of difficult near-term decisions

Earlier in the day, sources told CNBC-TV18 that Jet Airways has sent 60 percent of its employees, including senior management, on leave without pay (LWP) for three months starting December 1. It must be noted that Jet Airway's former staff make up more than 60 percent of the current workforce, and these employees are yet to be paid their dues.

The development comes on a day when Jalan-Kalrock Consortium, the winning bidder for the debt-ridden Jet Airways through the insolvency resolution process that received National Company Law Tribunal (NCLT) nod, released a statement indicating it might have to take “difficult decisions” in the near term.

“While we await the handover of the company as per the NCLT process, the longer-than-expected time being taken for the same may result in some difficult but necessary near-term decisions to manage our cashflows to secure the future while the airline is still not in our possession,” it said.

The consortium reaffirmed that there has been no delay from the JKC to implement the resolution plan and that it is in full compliance with the approved plan.

Sources have told CNBC-TV18, lenders are likely to take a stand against the Jalan-Kalrock consortium in the NCLT, saying conditions for resolution plan have not been satisfied.

Sanjiv Kapoor, Chief Executive Officer for Jet Airways, said, “With the planned October 2022 launch timeline in mind, we have put into place a highly experienced professional management team and negotiated excellent terms for our various supplier contracts that can often be critical in this industry. We have LOIs (letters of intent) in place for aircraft, engines, IT systems, ground handling services, catering, call centre, and all other services required to run an airline.”

He said that the negotiated terms, drawing on the collective experience of Jet Airways of the past and the experience of its team drawn from multiple Indian and foreign airlines, would help the airline in its revived form to be one of the most cost-effective airlines in the country.

Explaining the process, JKC said after the NCLT’s approval, all conditions precedent, as outlined in the resolution plan, were completed by May 20, 2022, and the necessary filings were made before the NCLT on May 21, 2022. JKC has deposited Rs 150 crores as required under the court-approved resolution plan with the lenders, with the remaining amounts to be invested only after the next steps of NCLT are fulfilled in terms of the handover of the company to the consortium.

“We have not breached any term of the resolution plan, and we remain committed to the revival of Jet Airways,” the statement read.

Earlier this week, CNBC-TV18 reported that the revival of Jet Airways in its new avatar is likely to be delayed further due to a deadlock over payments.

The JKC has filed an application in the NCLAT suggesting it won’t make any additional payment over the Rs 475 crore approved in its resolution plan.

This application relates to an order dated October 21, in which NCLAT directed the consortium to make payment of unpaid PF and gratuity to workmen and employees of the airline until June 2019, when the insolvency process was initiated.

The court had asked erstwhile Resolution Professional Ashish Chhawchharia to compute these payments within a month and communicate the same to the consortium. However, in the application, JKC has appealed to the court to clarify if the winning consortium has been directed to pay these dues.