You may still be able to fly on Jet Airways at a future date if the Indian government and the lenders to the beleaguered airline accept the conditions put forth by one of the entities interested in taking over the company. As you might have read in these columns recently, the Synergy Group Corp., a South American company with interests in aviation has submitted its expression of interest (EoI) to the Committee of Creditors (CoC) of Jet Airways. It was also made clear that Synergy is willing to make investments in reviving the airline and operating it as a budget airline flying international routes. However, it may not be so liberal with the existing lenders to the airline, requesting them to take huge haircuts and convert their debts into equity.
A US-based legal advisor to the Synergy Group has disclosed these in an interview to Livemint. According to this report, the Synergy Group would want to acquire a majority 51% stake in Jet Airways through its aviation arm Synergy Aerospace. This could be the first hurdle it has to cross, since the present laws do not permit any foreign entity with interests in aviation to hold more than 49% equity in airline companies in India. One must hasten to add that in her budget speech, the Finance Minister had said the government may be open to relaxing this norm, particularly in trying to find a suitor for the state-owned Air India.
The other plan the South American company has, is to start the operations with the existing aircraft and induct more planes and recruit staff etc. However, the airline will not operate domestic flights and only international routes will be chosen. It can use the slots in major airports that Jet Airways had been using but in other airports, investments will have to be made to obtain slots. All these, the legal advisor says the investor will be ready to bring in as working capital. The South American company is currently scouting for suitable Indian partners with whom it can enter into a tie-up and take the next steps if the lenders agree.
Meanwhile, it is reported that the founder of the Synergy Group, German Effromovich, is traveling to India on September 15 and may hold meetings with the lenders to Jet Airways.
From the lenders’ viewpoint, State Bank of India is leading the 26-bank consortium that has lent funds to Jet Airways. They have only approached the National Company Law Tribunal to search for a solution to this problem since Rs 8,500 crore of their money is at stake. The overall debt is reportedly Rs 15,000 crore. It may not be an easy decision for the state-owned banks to accept too much of a haircut for fear of coming under criticism. There will be a lobby ready to jump on such issues and point to other cases like Kingfisher Airlines which did not get any such treatment except for restructuring of its loans on a few occasions.