Kalrock to pilot Jet Airways take-off with Rs 1,000-crore investment
The Kalrock Capital-Murari Lal Jalan consortium has proposed to re-launch Jet Airways as a full-service carrier, with an initial investment of Rs 1,000 crore.
It has initiated discussions with lessors and international airlines for contracts and partnerships.
On Saturday, the committee of creditors voted in favour of the Kalrock-Jalan consortium over the FSTC-Imperial Capital combine. The winning bid attracted over 99 per cent votes, with lenders overwhelmingly voting for a revival instead of recovery through liquidation.
While Jet has admitted claims of over Rs 15,000 crore, the resolution plan consists of Rs 866 crore in upfront and deferred payment to creditors. A portion of the sum will be used to cover insolvency resolution costs.
Banks will also get a 9 per cent equity stake in the airline and an upside from the sale of aircraft. Employees have been offered 75 per cent stake in Jet’s ground handling arm, as well as a financial incentive of close to Rs 20,000 each.
“Our plan takes into consideration the interests of all stakeholders, including creditors and employees,” said Manoj Madnani, board member of Kalrock Capital. Madnani said the airline will initially restart domestic operations as a full-service carrier. The consortium will also tap cargo opportunities, and is in the process of selecting a management team.
“We remained optimistic even though most had written off a revival. Lenders, too, supported us,” said resolution professional Ashish Chhawchharia.
“By voting for the Jalan-Kalrock consortium, in the midst of the pandemic, the lenders have voted for resolution over liquidation, thereby truly vindicating the spirit of India’s insolvency process. Stakeholders including employees are naturally excited. With support of all including the government, we expect Jet to fly once again, soon,” said Rajesh Prasad, chief strategy officer of Jet Airways.
Yet, a big task lies ahead, given that the winning bidders will have to put together a team and secure all regulatory approvals. Securing prime slots at airports will be critical for operations, and a denial could be a potential deal-breaker.
While the low cost base will be an advantage for the new owners, they will need to make substantial investments. India remains a low-fare market and uncertainty over Covid-19 could pose challenges.
On their part, Jet’s lenders are giving revival a chance as liquidation would have yielded little result.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
