Mumbai: The consortium of lending banks led by the State Bank of India (SBI) has abandoned its efforts to re-establish the private sector Jet Airways (India) Ltd. The group of banks has decided to send the case to the National Companies Law Tribunal (NCLT) for action under the bankruptcy code to resolve the debt trap in which the airline finds itself. Banks have to recover Rs 8,000 crore from the airline.
Jet Airways was once the largest private airline in the country. Twenty-five years ago, Naresh Goyal, then a ticketing agent, had started this airline as an entrepreneur.
Even as the banks made efforts to revive the airline, no substantial proposal was received from any unit for the revival of Jet Airways that is immersed in debt. Although the Etihad-Hinduja alliance showed interest in the airline, no substantial proposal was received from it. The decision to send the airline’s case to NCLT was hence taken at the meeting of the banks on Monday.
This decision has been taken after reports that federal law enforcement agencies are monitoring the activities of Goyal. They are going to start a money-laundering investigation against him.
Jet Airways’ operations closed on 17 April. It has not paid salaries of 23,000 employees of the airline for several months. It has but increased its average airfare by 40%.
The government has given the airline’s slots at domestic airports to other aviation companies. Some of the slots at international airports have been given to other airlines.
The SBI said in a statement that, after intensive consultation, the lenders have decided that the issue of Jet Airways will be settled under the Insolvency and Bankruptcy Code (IBC).
The statement said that this move was necessary because the potential investors want some relaxation by SEBI for the deal. This kind of a deal can be handled better under the IBC.
The bank said that the lenders wanted a settlement of the case outside the IBC but now the decision has been taken to settle it under the law that the Narendra Modi government introduced during its previous term.
It is to be noted that two firms lending money to Jet Airways commercially, Shaman Wheels and Gaggar Enterprises, had appealed to the NCLT on 10 June to start the bankruptcy process against the airline. The tribunal has not yet filed these petitions for hearing. The tribunal had said on 13 June that it would look into the matter on 20 June.
The NCLT has asked the concerned parties to send a legal notice to Jet Airways.
Jet Airways owes Rs 8.74 crore to Shaman Wheels and Rs 53 crore to Gaggar Enterprises.
The airline owes more than Rs 8,000 crore to the SBI-led banks, too. Right now, the banks are running the airline financially. The total loss of Jet Airways stands at Rs 13,000 crore. The airline owes Rs 10,000 crore to the providers of goods and services while it owes Rs 3,000 crore towards the salary of its employees.