Lack of confidence among lenders reportedly halts grounded Jet Airways’ comeback

Aviation might be a high-flying sector, but in India it has been affected by high operating costs elevated by global fuel prices, and low air fares. Amidst challenges, 12 airlines have been grounded in the country, in little more than two decades, including its national carrier. While Air India is quickly recovering with steel to salt conglomerate Tata’s healing touch, another bankrupt carrier Jet Airways is struggling to take off again.

Lenders still not convinced?

Lack of confidence from lenders has robbed Jet Airways of the wind under its wings, as they are reportedly apprehensive about letting one of India’s first private airlines spend more on aircraft orders.This is why plans for Jet to pick itself up after insolvency this month, have been pushed off, as it discusses contracts with lessors.

At the same time a statement by Jet claims that the carrier has almost finalised the fleet plan for its comeback, that the airline has freedom to place orders for new assets. The delay comes weeks ahead of October 11, when the bankruptcy court will hold a hearing on the progress of Jet Airways’ revival under its new owners. After a two-year-long insolvency process, Jet was finally able to find buyers in Dubai-based Murari Lal Jalan and Karlrock Capital from London earlier this year.

Promising start to a steep decline

Launched in 1993 after India’s liberalisation, Jet Airways was once among the top airlines in the country, growing enough to operate international flights from 2005. By 2007 it had acquired Sahara Airlines and received a $380 million investment from Etihad in 2013. In 2018 Jet started posting losses quarter after quarter, due to a weak rupee and a surge in fuel costs. It defaulted for the first time that year, and was weighed down due to a Rs 8000 crore debt.

By March 2019, Jet Chairman Naresh Goyal had stepped down and the airline shut down operations temporarily before being rendered defunct. Finally lenders took it to NCLT for a resolution, where insolvency proceedings were initiated.

Long road to recovery

Jet is supposed to inform the regulator once it seals the deal for engines and aircraft, but the private carrier hasn’t placed any new orders, while most of its old fleet has been leased to other airlines. At the same time the airline is hiring a new crew, and its CEO Sanjiv Kapoor has dismissed doubts about the carrier’s returns to the sky on Twitter.

Amid funding woes, Jet’s shares have gone down by 30 per cent, after hitting a high over hopes of recovery in May.