Jet 2.0: What remains to be done for the airline to fly again

The plan is to bring the airline back to its glory days and Jet 2.0 is what some of them are calling this, says Ashish Chhawchharia.
The way our aviation sector is growing, the banks have taken a call on how they want to revive this company based on the plans submitted by the Kalrock consortium, says Ashish Chhawchharia, Resolution Professional, Jet Airways.

It has been 18 months since things went south for Jet Airways. What is your outlook on the resolution plan? How much equity does Kalrock and Jalan plan to infuse into the airline?
Since the airline was suspended back in April, it has been a tireless effort from my team. The lenders who have been extremely patient led by State Bank of India, had played an anchor role in the whole process. The expectation is that now we can revive the airline back to where it was prior to suspension. There are still a few more formalities to be carried out. There is a quick caveat because the process is still on. I cannot share too many specifics about the plan but I can only tell you that you know the plan is to bring back the airline back to its glory and Jet 2.0 is what some of them are calling this.

The company obviously has to do a resolution or a settlement for the creditors which were there before the company shut down and then of course new capital needs to be introduced for the revival of the company. The business plan that has been submitted by the Jalan Kalrock consortium have provided for both these aspects and the lenders in their commercial wisdom have now approved the plan. After a few more formalities, we should be able to get these airlines back in the skies soon.

Does this resolution plan include selling six old planes and buying new ones?
Without getting into too much specifics, when the new airline starts or restarts again with the Jet Airways brand, the idea would be to have more efficiency. The applicants would certainly be looking at modernising their fleet. There are some plans to bring in better more fuel efficient aircraft and maybe trade them off with the older ones but that is purely based on efficiencies that they want to bring in going forward.

How much upfront payment will lenders make and how much equity will be given as well and which are the lenders which will receive the most equity?
Once again I cannot share very specific details about the plan. But I can tell you that the lenders have approved a plan whereby they intend to remain interested in the company so they will remain interested both in terms of debt and equity and that is how revival of a company should be looked at. It is not a recovery mechanism or IBC. It is a mode of reviving the company and for creating economic resources. The way our aviation sector is growing, the banks have taken a call on how they want to revive this company based on the plans submitted by the Kalrock consortium.

When do you see the deal closing and the bidders taking over the airline?
There are two very important steps that we have reached. It is a very important milestone. Over the weekend, the lenders have approved the plan by a substantial majority and they have raised the trust on this consortium. But there are two important steps that need to happen before we can expect to see Jet flying again.

First, one has to get the NCLT approval as required by IBC. They are going to look more at the process and the compliances that have been carried out. Are they meeting the requirements or not? That is the role of the NCLT. They let you dictate on the plan once it is submitted to them and then of course one of the asks of the revival plan is that the airline should be awarded back the slots which they were using prior to suspension. For any airline to operate, it is not just about the aircraft and the people. Airport slots and traffic rights are equally important. Jet used to enjoy some premium slots and those were temporarily given to other airlines to make sure that the capacity requirements in India are met but one of the asks with the applicant is to get some of those slots back so that they can operate as per their business plan. I am sure the government and the ministry will look at this favourably and will award these slots back to Jet. That is where the airline will find most of its operations coming from.

Will the former employees be paid their dues or is any equity stake being offered to the employees? Could they be re-employed with things getting back on track?
Yes, certainly regarding the dues of the employees who have been unpaid and who have been sitting patiently for so many months, there are certain provisions within the insolvency which protect their interest and the plan offered and approved by the lenders now is also to ensure that. Those compliances are the minimum requirements as per the IBC. There is going to be some sort of recovery of their past dues coming out of this as well. Going forward, the resolution applicant has offered some novel ideas on how to engage with these employees and these are quite encouraging.

They have spoken about making an employee owned organisation within this which will be offering services to Jet Airways and they would get a preference. So certainly, there is an attention towards the employees which cannot be skipped. This is very important because an airline is very much a services sector industry and you need the people, you need the most experienced and trained personnel -- be it pilots, cabin crew and engineers. There are plans about how they will engage with people as they ramp up the business.

But obviously one cannot expect that from day one. When I started here, there were more than 12,000 people last year who were still on the rolls of the company. I believe at its peak, it had over 20,000 people. That is not expected because operations will be ramped up gradually and who will not look for the experienced and trained personnel? I am sure the existing personnel of Jet will get some preference there.

Do the existing contracts remain valid?
There is nothing in the insolvency code which talks about termination of contracts. So the contracts remain. It is something which needs to be vetted legally. They will start with a new slate and depending on the size and scale of operations, those would be negotiated by the new owners of Jet.

For example, say a catering supplier was supplying over 120 aircraft that they owned and over 600 departures which Jet had everyday. Now that may not be important from day one. So, there will be some sort of changes but people who have worked with Jet -- be it vendors, suppliers or employees -- I am sure the new owners would look to engage with them going forward.




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