With only a few details public and no dates set for resuming fights, there is no guarantee that this will succeed
The bid to take over the remaining assets and brand of Jet Airways by Dubai-based real estate entrepreneur Murari Jalan and American private equity firm Kalrock Capital has been accepted by the lenders. Even though they will have to accept a massive 90 per cent haircut on their outstandings from the airline, the fact that they will get something is a lot better than what they faced with Kingfisher. Former employees of the now grounded airline as well as other unsecured creditors, everyone from those who provided taxi and catering services to passengers with tickets for flights that never took off, are hoping that the new management will clear their dues as well. Unfortunately, while the new management might absorb some old employees and even executives, it does not hold any obligation to clear these unsecured dues. The new owners could clear some dues in order to build goodwill but of the estimated Rs 40,000 crore owed by Jet Airways to various creditors and employees at the time it suspended operations in April 2019, much of it will never be seen again.
This deal is being spoken about as a success of the Insolvency and Bankruptcy Code (IBC) that was introduced by the Government in 2016. Some even suspect that the Government pushed this deal through to highlight that the IBC can be a success as several other high-profile cases are stuck. That said, the proof of the pudding is in the eating and the proof of an airline is in the flying. With few details public, there are no firm dates on when this ‘new’ Jet Airways can fly again. As the aviation market globally is in the doldrums, one also questions whether this is a smart time to launch an airline when customer demand is less than half of what it was this time last year. Yes, it will be easier than it would have been in February to get slots and even lease new planes but the new management should not have misplaced optimism about “customer loyalty.” Restarting a brand, any brand, and particularly a service brand after a period of not operating is not easy and customers are extremely fickle. And with the likelihood of one, maybe even two airlines in India potentially falling victim to the pandemic, thanks to stretched balance sheets, things might actually get very difficult for the new ownership. That said, we wish them all the best and hope that they can succeed, and hope is a very powerful thing these days.
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