Naresh Goyal submits EoI as crisis-hit Jet Airways stares at closure

PMO holds emergency meeting to discuss the crisis; international flights remain suspended

Jet Airways, started by Naresh Goyal more than 25 years ago, seems to be on the brink of closure as the lenders’ consortium, led by State Bank of India, has so far failed to infuse the committed interim fund of Rs 1,500 crore to revive the airline. 

The crisis, resulting in the suspension of Jet’s international flights at least till Monday, grounding of around 90 per cent of its planes and a protest march by the employees of the airline, is learnt to have prompted the Prime Minister’s Office (PMO) to call a meeting with officials in the civil aviation ministry Friday evening. According to a PMO official, however, such meetings are scheduled from time to time and may not have anything to do with Jet. The PMO meeting coincided with the closure of a pre-bid process for buying Jet. 

While Friday was the last day for potential bidders to submit their expression of interest (EoI) to buy a stake in Jet in a lenders-led resolution process, there was no communication from either the airline or the banks on the outcome. However, sources in the know said Goyal, who was forced to step down as chairman of Jet recently, submitted an EoI close to the deadline, indicating his keenness to return to the airline he had founded. Abu Dhabi-based Etihad Airways, which holds a 24 per cent stake in Jet, had on Thursday submitted an EoI to raise its stake to 49 per cent. Etihad is possibly the only airline to have expressed interest in the pre-bid process. Among others, private equity funds, including TPG Capital, and sovereign wealth fund National Infrastructure Investment Fund are in the fray. 

Despite the EoIs, the cash crunch has put the survival of Jet at a risk. “Banks are unwilling to release more funds, there is a grave crisis. Operations may have to be shut down,” a senior executive of Jet Airways said. In fact, the airline is learnt to have informed the government on Friday that it will be able to continue operations only till Monday if no funds come from the banks. 

The PMO official quoted above said the government has no say on the Jet matter. According to him, it’s a business decision whether or not to continue operating Jet. On the bank-led resolution plan, he said, “banks are still trying to save the airline.”  

He refused to comment on why the committed fund infusion by lenders’ consortium had not been executed till now. 

‘’On Monday again, the airline will approach the banks for funding. Depending on what the banks decide, the future course of action would be taken,” civil aviation secretary Pradeep Singh Kharola said. It is believed that there’s a lack of consensus among the lenders’ consortium on infusing additional funds of Rs 1,500 crore. 

The airline, with more than Rs 8,500 crore of debt besides other dues, will be operating seven planes till Monday. The fleet will include two Boeing 737 and five ATR-72 planes. The international operations remain suspended as it has grounded all the wide bodies due to paucity of funds. In Mumbai, where the airline used to have 140-plus daily departures till a few months ago, there were only two take offs on Friday.

“The requirement of interim funding has increased. Due to delay in funding process and losses sustained daily, the requirement of interim funding is at least Rs 2,500 crore now and a trickling amount will not help. Banks have asked to rework the proposal,” an official aware of the developments said.

Even as airfares have been on an upswing across India for the last few weeks due to sharp decline in number of flights primarily caused by grounding of planes of the cash-strapped Jet Airways, there’s been significant movement on airport slots too. 

Etihad has taken back three slots, currently used by Jet, at the London airport. The slots were originally owned by Jet Airways and sold to Etihad in 2013 as part of an investment transaction. Jet continues to operate them on lease. Etihad has requested the Heathrow airport co-ordinator to transfer the Jet slots from April 28. “If Etihad wins the bid, it would probably return the slot to us,’’ a Jet executive said hopefully in the midst of the crisis.

Jet Airways and Etihad did not respond on the matter.