Jet Airways: From illusion to delusion

Let's begin with an assertion: those following the developments at Jet Airways who still believe that the erstwhile airline will soon be back in the skies may be delusional. 

Why, you may ask, since there are multiple reports of Jet Airways' imminent relaunch. More recently, a report said the much-awaited funds infusion promised by the consortium that won the revival bid would be coming in, clearing the decks for the final take-off. But no matter who says what, the aviation industry remains unconvinced, primarily because the Jet relaunch so far has been a story of misses and more misses from the word go. 

The proposal for the revival of Jet Airways first surfaced around July-August 2019, a few months after its shutdown in April 2019.  One of the early disappointments was when Indian billionaire Anil Agarwal announced that his company was withdrawing from the revival bid process even as Etihad, which already had a stake in it, declared that it too would stay away, choosing to write off its earlier investment rather than risk putting in any more funds.

After a lot of ups, downs, twists, and turns, in October 2020, the committee of creditors cleared the revival plan submitted by the Kalrock-Jalan consortium but it took another 8 months for the NCLT to do the same, coinciding with the two year anniversary of the start of the airline’s insolvency proceedings. Many felt at this stage that too much water had already flown under the bridge and that the revival after two years of the shutdown was unrealistic. Several unverifiable rumors floated throughout the time including the fact that the best bidder did not win, that the banker’s role including top SBI officials in the whole exercise was questionable, that the whole exercise was to help some market movers recoup money by selling Jet stock and even that the whole NCLT process was nothing but a farce.  There was even talk that some of those who were vested were only in it to make some money off the sale of whatever assets remained.

Nonetheless, a few committed individuals pressed on. Unfortunately, even after the NCLT clearance, things moved at a snail's pace and many who first backed the revival plan began to exit after losing faith, patience--or both. In December 2021, two of the staunchest supporters of the revival - former commander and accountable manager Sudhir Gaur and former finance head M. Shivkumar threw in the towel. 

Despite these developments shaking the faith of many observers, hopes, rumors, and talk of imminent revival still remained high. Things appeared to pick up pace in the first half of 2022 when the airline was able to bring on board a new CEO - Sanjeev Kapoor and a few other senior executives. It also carried out its proving flights and engaged in some discussions with DGCA, the ministry of civil aviation (MOCA) and other authorities.

But in June or July this year, the ship again re-entered choppy waters.  In September, the vice president for sales, distribution and customer engagement resigned as did three other director level executives. It also missed its internal deadline for starting ticket sales. Some in the industry believe the relaunch is just an elaborate yarn while others argue that there is sincerity behind the effort but not enough. The latter argue that the airline might get off the ground but it will not remain there, sputtering and then halting again.

Two critical matters remain unresolved, a chicken and egg kind of situation. One, the promised funds have failed to come in. Two, the airline doesn’t have a final fix on either its aircraft or the engines for the airplanes. Both matters have ensured that the proposed relaunch can’t possibly happen anytime soon.

As per the resolution plan approved by the NCLT, the consortium led by Murari Lal Jalan is committed to funding $180 million into Jet Airways. Of this, about $60 million will be used to settle the liabilities of Jet 1.0, and the remaining $120 million will be used to fund the restart of the airline. This initial investment excludes any income from sale-and-lease-back (SLBs) and income from the sale of company assets. The shareholding pattern is as per the resolution plan approved by the NCLT – the banks will own 10%, and the remainder 90% by the consortium. No debt has been raised so far. But all the deadlines for funds infusion have been consistently missed. “The resolution plan had a set of deadlines for different actions required by the winning bidder. All, and I mean all, the deadlines have been missed,” says a source associated with the process.

But what is perhaps most surprising for the industry and MOCA officials is the fact that the airline is yet to zero in on which aircraft and engine the airline would relaunch with. In response over Whatsapp, a top airline source said on October 5 that the airline hopes to open tickets for sale this month (October) and that the “priority was to get the best possible aircraft and engine contracts”. He adds that if that takes a bit longer to finalise, so be it. Experts, analysts and MOCA sources say that it takes almost four to six months after an airline has selected its aircraft and engines to get going. 

It seems the Jet team working on the revival hasn't yet crossed this bridge yet. Either way, unless the funds begin to come in, the airline cannot finalise its aircraft or till it does that a relaunch is out of the question. Most industry experts and government officials have lost faith in the relaunch story and argue that what looked like an illusion sometime ago appears like a delusion today.