18 March 2019: Amid grounding of operations at Abu Dhabi airport, an unhappy partner in Etihad Airways and increasing unease among its pilots, all eyes are on Jet Airways’ founder and Chairman Naresh Goyal as his self-imposed deadline to announce an update on the resolution plan gets over on March 18.
Patience is running out among the distressed airline’s senior pilots, many of whom have been approached by IndiGo and GoAir. Some of them attended ‘roadshows’ conducted by IndiGo last week in Gurugram and Mumbai and may decide on their future course depending on what Goyal has to tell them.
“Tempers have gone up after an aircraft maintenance engineer lost his son for want of funds,” said a senior executive.
Jet Airways’ pilots and engineers have not been paid part of their December salary, and those of January and February.
On March 1, Goyal had written to the airline’s pilots, appealing for ‘continued support’ and assured them that the senior management will provide an update on the resolution plan by March 18.
“While a few steps remain, some critical steps are behind us and the remaining approval processes are well underway. I assure you that I am personally working this situation as rapidly as possible,” Goyal had said.
But the ‘few steps’ seem to be hard in coming, especially after Jet Airways grounded its operations in Abu Dhabi, which is the home base of Etihad Airways. Jet Airways’ hub in Abu Dhabi is critical to feed Etihad’s flights to Europe.
The Middle East airline continues to stick to its demands, including capping of Goyal’s stake in Jet Airways and exemption from opting for an open offer in case it decides to invest more money in the Indian airline, thus increasing its stake.
While Goyal holds 51 percent stake in the airline, Etihad has 24 percent.
Post the resolution plan, banks are expected to take control of the airline, which has a debt of over Rs 8,000 crore.
The NCLT deadline
Goyal has to be mindful of the 90-day deadline from the date of his first default on loan repayments on December 31, 2018. Lenders can take a defaulting company to National Company Law Tribunal (NCLT) after 90 days of default.
On March 11, Jet had defaulted again, this time on an external commercial borrowing.
State Bank of India, the lead lender, has till now maintained that it is not considering the NCLT route to recover its loans. A senior SBI official had said that the resolution is likely within a week.
“It is by desire that this airline keeps running, that is the fundamental difference between this and other non-performing assets. We are hopeful of arriving at a resolution in one week,” the official said.
Jet Airways’ pilots have been offered ‘impressive’ salary terms from IndiGo and GoAir. Both airlines have promised these pilots compensation for their salary arrears and a base of their choice.
Most pilots have been put on standby as Jet Airways has grounded over 50 of its aircraft after failing to pay its lessors. Also, the airline has shut down stations and curtailed its operations leading to lower flying hours for its pilots.
“Many of these pilots now are sitting on offers. But haven’t taken a decision as they are waiting to hear from Goyal,” a senior executive said.
The death of a colleague’s son hasn’t helped. Moneycontrol had reached out to the aircraft maintenance engineer, who had requested the Jet Airways’ management to release his salary, so that he could have his son operated. He replied saying that his son has passed away and he didn’t want to discuss the issue.