CoC approves Kalrock Capital-Murari Jalan's plan to revive Jet Airways

The plan submitted by Kalrock consortium won by an overwhelming majority, say sources

Eighteen months after it shut down and sixteen months after it became the first airline company to be admitted under insolvency and bankruptcy code (IBC), Jet Airways is finally all set to make a comeback, albeit with a new owner – Kalrock Capital and Murari Lal Jalan.

The resolution plan of consortium of Kalrock Capital–Murari Lal Jalan has been approved by the committee of creditors as e-voting of the lenders concluded on Saturday. “The e-voting concluded today, i.e October 17,2020 and the resolution plan submitted by Murari Lal Jalan and Florian Fritsch has been duly approved by the CoC under section 30 (4) of the code as the successful resolution plan”, the resolution professional said in an exchange notification.

Sources said, the plan submitted by Kalrock consortium won by an overwhelming majority.

As the committee of creditors have voted for Kalrock Capital led consortium to revive the airline, with a majority, the resolution professional of Jet Airways 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.

Jet Airways slots at major airports and its traffic rights were awarded temporarily to other airlines. Its operating permit is dormant and would need to be made active and licences of pilots and engineers would need to be renewed. “The whole investment is contingent to the airline receiving these approvals and plan could still stumble," said a person familiar with the matter.

A civil ministry official said that slots and rights will not be an issue. "Slots and rights will go back to pool and reallocated according to size and demand of airline. There are no problems with slots," said a senior ministry official.

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 is expected that lenders will take a fairly large haircut on their exposure.

While globally aviation companies have suffered due to Covid-19, it has also presented opportunities for new investors. “A new airline would be able to negotiate better rates with aircraft manufacturers and suppliers. Lease rates have declined. Pilot availability too has eased and many could be ready to join at lower packages,” said an aviation consultant K G Vishwanath.

Also in India the incumbent airlines are much weaker now and running high losses due to fall in passenger traffic. With only two airlines (Air India and Vistara) offering a business class service, there could be opportunity to grab the market share in premium traffic. It is not however clear how the new owners would like to position the airline.

Still the new owners would need to make a significant investment to kick start the airline.

Kalrock Capital was founded by European entrepreneur Florian Fritsch. According to his website, Fritsch began his career as a paramedic in Red Cross and set up his first company at age of sixteen. Over the last two decades he has invested in electro mobility, real estate, and renewable energy. This included investment in Tesla in 2008.

Kalrock is a financial advisory and asset management company focusing on real estate, venture capital and special situations. The firm has partnered with Dubai based businessman Murari Lal Jalan who has investments in diverse sectors like real estate, mining, trading, FMCG across various countries like UAE, India, Russia and Uzbekistan.

The Kalrock-Jalan combine was pitted against Imperial Capital-FSTC consortium which is also setting up another airline in India called Fly Big. The startup airline has been awarded routes under government's regional connectivity scheme (Udan) and hopes to start operations on Udan and non Udan routes from next month. Initially Fly Big aims to have a fleet of six ATR aircraft.

Jet Airways operated its last flight between Amritsar-Mumbai on April 17, 2019, as lenders turned down its demand for emergency funding. It has been under insolvency since June 2019.

Time line:

• April 2019: Jet shuts operations temporarily
• June: SBI takes Jet to NCLT
• September: Synergy Group expresses but fails to give a plan
• January 2020: RP 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 call for fresh EoIs; receive 12 EoIs
• June: Four make the cut out of 12
• July: 2 bidders give a resolution plan for Jet’s revival
• September: Bidders make changes to their plans post discussion with lenders
• October: Voting on the plan starts; voting to conclude by October 16
• October: E-voting concluded on October 17; CoC picked Kalrock Capital-Murari Lal Jalan consortium