Jet Airways asset monetisation plan further delayed as impasse grows

Jet Airways’ asset monetisation plan has taken a hit due to an impasse between lenders and the Jalan-Kalrock consortium over the contours of its resolution plan.

ET has learnt that the airline has postponed a plan to monetise the assets, which include 11 aircraft (5 Boeing 777s, 3 Boeing 737s and 3 Airbus A330s), as well as aircraft engine spares.

While bidding for the assets were called for in August and around a dozen bidders had done the due diligence, the monitoring committee of Jet Airways, which includes banks and representatives of Jalan-Kalrock, has postponed the process by around 90 days.


The postponement comes after the National Company Law Appellate Tribunal (NCLAT) ruled that all eligible employees have to be paid their provident fund and gratuity dues amounting to around Rs 275 crore.

While banks want the consortium to pay the additional amount, the consortium has said that it is not liable to do so.

Differences have also cropped up as the consortium has not paid the first tranche of Rs 185 crore to lenders and have also laid claim to the lease rentals accrued from Air Serbia to which Jet had leased three Boeing 777 aircraft.

On their part, lenders have refused to hand over the company to the consortium before they receive the payment.

“When the bid process began, there were a dozen serious bidders for the aircraft. There was a vibrant secondary market for wide-body market as the industry was opening up after Covid-19. Now, after this delay, there is a huge question mark on how much value the aircraft will generate,” said an executive at an aircraft after-market firm.

Grounding of aircraft for long depreciates their value significantly.

As part of the resolution plan, it was intended that the upside from the sale of 11 aircraft and spares would be used by the Jalan-Kalrock consortium to pay the lenders.

According to the plan, sales of up to Rs 500 crore would be pumped into the company while anything over and above that would go to the creditors.

Lenders of the erstwhile airline have taken a massive 95% haircut in the resolution process.

Of the total admitted claim of over Rs 7,800 crore, the consortium had offered to pay them Rs 380 crore in two tranches, of which Rs 185 crore was to be paid within 180 days from the effective date.

“It has been mutually agreed to not go with the sale now as none of the creditors or the employees have been paid yet,” said a person associated with the Jalan-Kalrock consortium.

But the stalling of the monetisation plan further underlines the growing differences between the airline's lenders and the consortium, pushing it further towards liquidation, industry experts said.

“The consortium is ready with the money to be given to the banks, but they have not agreed. According to the consortium, the effective date was May 20 and the cycle kicked in then. Now, we will tell the court that since this impasse has wasted six months, we should get another two months. Or, if the court gives a fresh effective date, that kickstarts another 90-180-day cycle,” the person added.

But this won't be easy.

“…legally, there cannot be any retrospective declaration of the effective date, nor can be there be any retrospective extension to the effective date. Hence, I cannot foresee any legal outcome, other than liquidation,” said Rahul Kamerkar, a lawyer representing the Jet Aircraft Maintenance Engineers Welfare Association.