Jet Airways closer to getting its wings back: A timeline

The revival plan for the debt-laden Jet Airways, submitted by a consortium of Kalrock Capital and UAE-based Murari Lal Jalan, has been given the go-ahead by the National Company Law Tribunal (NCLT).

The Director General of Civil Aviation (DGCA) and the Ministry of Civil Aviation have been given 90 days to allot slots to the grounded airline.

Jet had about 700 time slots, but after its suspension in April 2019, those slots were allocated to other airlines.

A resolution process under the Insolvency and Bankruptcy Code (IBC) has been on for the last two years, but the latest development brings a ray of hope to the airline, which may resume operations within six months.

Jet Airways was facing increasing financial pressure due to rising operating costs. Added pressure from new competitors compounded the crisis. As a result, the company failed to meet several debt obligations.

Early in 2019, Jet had to ground a significant portion of its fleet after defaulting on lease payments. Soon after, Indian Oil Corporation (IOC) stopped supplying fuel to the beleaguered carrier over uncleared dues. Jet Airways had to soon shut down operations completely as it ran out of cash to conduct any further flights and its lenders rejected an infusion of Rs 400 crore as emergency funding.

When talks with the Hinduja Group and Etihad Airways for investing in Jet Airways fell through, the creditors of the company moved to the NCLT to formally start the insolvency process.

Grant Thornton and SBI Capital were placed as professional advisor and process advisor in the resolution procedure. The NCLT gave a 90-day timeline for the resolution process.

But as the resolution professionals highlighted the strengths and progress reports of the airlines, claims against the company came from every direction. By 2020, the total claims stood at $5.1 billion. The NCLT rejected $2.85 billion worth of claims, while $1.5 of the remaining claims came from banks and other financial institutions.

In the meantime, the company was facing cross-border insolvency in the Netherlands as well.

In the face of mounting claims, no buyers emerged within the original timeline. An extension of 180 days was granted, during which South American conglomerate Synergy Group Corp, Russia-led Far East Development Fund, Prudent ARC, and a reinterested Hinduja Group considered bidding for the airlines.

Out of the many speculated bidders, the Committee of Creditors received just one bid, from Synergy Corp. The bid, however, was rejected since it came with the stipulation of writing off a significant portion of the debt, and converting the remaining into equity.

As the COVID-19 pandemic hit the globe, even fewer buyers came forward, with the insolvent company belonging to one of the hardest hit sectors.

In June, the NCLT granted permission to the airline to sell its Bandra Kurla Complex for $68 million. The payment was immediately utilised by the bank to settle mortgage debts to HDFC and US-based Exim Bank. The payments helped unencumber six aircraft with a total value of $200 million.

Buyers seemed more interested in the airlines than before.

UK investment fund Kalrock Capital along with Murari Lal Jalan, a UAE-based entrepreneur, emerged as leading candidates by September. Imperial Capital Investments LLC from Abu Dhabi and Flight Simulation Technique Centre (FSTC) were the second consortium to submit their bids. FSTC later submitted an improved bid, but as the bid was outside the deadline, the Kalrock-Murari Lal Jalan bid was accepted. The bid was worth $136 million, with $20.5 million paid as performance security.

The NCLT approved the Kalrock-Murari resolution bid and set the stage for Jet to resume its operations after receiving slots and rights from the Ministry of Civil Aviation. With the resolution process closed, Jet Airways became the first airline to go through the insolvency process under IBC in India.