A consortium of 26 bankers led by State Bank of India (SBI) have finally decided to take the grounded Jet Airways to bankruptcy court after failing to revive the company and find buyers. Insolvency proceedings have been initiated against debt-ridden Jet Airways, which stopped flying on April 17. Before the bank consortium filed the bankruptcy proceedings for Jet Airways, two operational creditors – Shaman Wheels and Gaggar Enterprises – had already taken the airlines to National Company Law Tribunal (NCLT) as the airline owes Rs 8.74 crore and Rs 53 lakh to the two companies, respectively. After the airline stopped flying, most of its domestic and international slots have been given away to other airlines by the government.
Jet Airways will be the first airlines company in the country to go into bankruptcy, as it owes over Rs 8,000 crore to banks and thousands of crores to vendors, lessors and employees. Jet Airways was started by airline-ticketing-agent-turned-entrepreneur Naresh Goyal about 25 years ago. It was the country’s oldest private sector carrier and remained a dominant player in the Indian skies. At its peak, it had 120 aircrafts flying to almost 1000 destinations in the country and abroad. The two potential buyers Etihad and the Hinduja Group wanted 85% haircut on the Jet Airways bank loans which was unacceptable to lenders. The lenders led by SBI have been trying to sell the airline for the past six months but failed due to many reasons.
Trouble for long time
The airline has been making loss for a long time and has accumulated a loss of over Rs 13,000 crore, has a total debt and dues of Rs 36,500 crore and has negligible assets to recover. Despite Abu Dhabi’s Etihad Airways taking 24% stake in the airline in 2013, Jet Airways had been slipping deeper into negative equity for seven years.
The company had only 16 aircrafts on its book valued at Rs 5,000 crore and the rest of its 123 fleet were on lease and most of them have been de-registered or taken away by the foreign lessors. As the airline ran out of money, promoter Naresh Goyal had to give up control on March 25 and the banks in principal had agreed to infuse Rs 1,500 crore to meet the daily operating expenses.
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