Jet Airways’ asset monetisation is further delayed again

A standoff between lenders and the Jalan-Kalrock partnership over the specifics of its resolution plan has hampered Jet Airways’ asset monetisation strategy.

Jalan-Kalrock consortium is a partnership of Mr. Murari Lal Jalan and Mr. Florian Fritsch of Kalrock Capital, the Successful Resolution Applicant of Jet Airways (India) Ltd. The Jalan-Kalrock consortium, which obtained the airline through the Insolvency and Bankruptcy Code (IBC) procedure, had stopped operations in early 2019 due to a financial crisis. The airline is now preparing to restart services. 

However, the Jalan-Kalrock consortium has not yet met all of its financial obligations, and the due date is quickly approaching. It has to fulfil two deadlines, and based on current events, it appears that it may miss both.

First, before the close of business on November 11, the consortium must pay Rs 52 crore to the labourers and employees of the former airline. The second deadline is for paying 185 crore rupees to various lenders. This payment is due from the consortium by November 16; however, CNBC-TV18 has learned that this payment has also not been made as of yet.

Only once the first tranche of payments to lenders is made will the Jalan-Kalrock group acquire ownership of Jet Airways. Therefore, the consortium cannot lease aircraft under the name of Jet Airways if ownership is not transferred.

The consortium will not be permitted to lease aircraft under the Jet Airways name if ownership is not transferred.

Jet Airways has delayed its plan to monetize its assets because of a standoff between the Jalan-Kalrock consortium and the lenders over the specifics of its resolution plan.

The plan called for the sale of 11 aircraft (5 Boeing 777s, 3 Boeing 737s, and 3 Airbus A330s), as well as spare aircraft engines.

The idea has been postponed by roughly 90 days by Jet Airways’ monitoring group, which also comprises banks and Jalan-Kalrock members. According to the Economic Times, a dozen or so buyers participated in the asset sale bids that were requested in August.

The National Company Law Appellate Tribunal (NCLAT) ordered last month that Jet Airways’ new owner, the Jalan-Kalrock consortium, pay the unpaid provident fund and gratuity dues of qualified employees, totalling around Rs 275 crore. As a result, the plan has been suspended. The consortium has said that it is not obligated to pay the additional money, despite banks’ requests for it to do so.

The conflict between the two sides has also arisen as a result of the consortium failing to pay lenders the first instalment of Rs 185 crore. It also asserts ownership over the lease rentals accumulated from Air Serbia, from whom Jet had leased three Boeing 777 aircraft. Lenders, meantime, do not consent to hand over the carrier to the consortium prior to receiving payment.

Jet had leased 3 Boeing 777 aircraft from Air Serbia

A NOC (No Objection Certificate) will only be granted once the new owners agree to a schedule for carrying out the debt resolution plan, which calls for a staggering payout, according to earlier statements made by the lenders’ consortium led by the State Bank of India. 

Jet Airways’ anticipated relaunch has been repeatedly postponed, and the company has not yet provided a timeline for when flying operations would resume.

After exiting bankruptcy proceedings and changing ownership, Jet Airways announced plans to begin operations during the third quarter of September after acquiring the AOC (Air Operator Certificate) from the DGCA on May 20. However, more information regarding the airline’s aircraft pipeline is still needed, and a related announcement is anticipated.

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