Till March 31, 2019 the pilots of Jet Airways used to urge the Prime Minister Narendra Modi and Civil Aviation Minister Suresh Prabhu to intervene and instruct the management to release their pending salaries. They also used to threaten to stop flying from April 1 if their pending salaries are not cleared.
“We fear that the airline is on the verge of collapse. This will leave thousands of people unemployed. It will change the dynamics of aviation as fares will increase due to a reduction in capacity, and travelling public will face major inconvenience. The pilots have maintained professionalism and not hampered operations of the airline as that would have had a catastrophic effect on passengers’ travel plans,” said the National Aviators Guild (NAG), the registered trade union of Jet Airways’ Indian pilots in their letter dated 23 March 2019.
Finally, the distressed airline was forced to suspend operations on April 17, 2019. The Naresh Goyal-led Jet Airways closed down after 25 years of existence with more than one billion dollars of debt.
Jet’s lenders, the state-owned banks, had been working on a resolution plan to bail out the fallen airline. Jet had also talked with Abu Dhabi-based Etihad — its majority stakeholder — to secure a rescue deal.
Today, a number of Jet Airways aircraft have been leased to its rivals like SpiceJet and Vistara. The government may distribute 440 of Jet Airways slots in Delhi and Mumbai airports to other airlines. It has been learnt about Jet’s aircraft being de-registered and given to other operators along with facilities including the invaluable slots and routes.
Such developments give rise to serious concerns that bidders for Jet Airways may lose interest.
The State Bank of India (SBI)-led lenders’ consortium of Jet Airways is trying to recover their dues through the sale of the airline. SBI Caps, the merchant banking arm of SBI, is currently shortlisting the investors. The four bidders shortlisted by the banks so far are – Etihad Airways, TPG Capital, Indigo Partners and NIIF. The bids have to be submitted by May 10.
However, the surprise package is none other than one employees’ body as one of the intending bidders in the process which claims that it can turnaround Jet Airways. It remains to be seen whether the lenders consider this as a legitimate bid. The ball is now in the court of SBI.
A Pleasant Surprise.
SurThe SBI Chairman Rajnish Kumar received a letter from an ‘Employee Consortium’. Two associations representing pilots and engineers — The Society for Welfare of Indian Pilots (SWIP) and the Jet Aircraft Maintenance Engineers Welfare Association (JAMEVA) — have written to State Bank of India (SBI) Chairman Rajnish Kumar proposing that they would take over the airline.
It claims itself as consortium of employees and investors which promises a commitment of Rs 7,000 crore: Rs 3,000 crore from investors and Rs 4,000 crore from employees through a ‘hypothetical five-year employee stock option programme.
The signatories are senior Jet Airways employees:
- Capt Ashwani Tyagi, General Secretary of SWIP,
- Ashish Kumar Mohanty, JAMEVA President
- Capt PP Singh, Sr Vice President (Operations) and Accountable Manager, Jet Lite, and
- BB Singh, Manager, Human Resources, Jet Airways.
The lending banks and the Govt of India now have one most reasonable option: to seriously consider the Employee Consortium’s bidding plan. The spirit of their letter does create an impression that the bidder is well backed by financially sound investors and suitably qualified and experienced personnel which have the necessary ability to turnaround the airline. Jet Airways well-paid pilots have revealed why they continue to nurture hope and refuse to look for a job elsewhere even as their future with Jet Airways is unsure. The pilots’ sense of pride in working for Jet Airways stands out prominently.
If, however, the lenders do not show any temerity to consider this proposal, then irrespective of the outcome after deliberations on May 10, 2019, the conspiracy theory to bring Jet Airways deliberately down will get a boost. A poignant smell of foul play will be seen with the way things will be panning out. That would need to be investigated.
Another surprise element: A few days ago, the employees were threatening strikes, then they displayed tearful protests on streets after April 17. Today, they are trying to bid for the airlines’ takeover!
Socialism Meets Capitalism.
Despite adverse conditions, there appears a glimmer of hope for Jet Airways to once again soar to the skies even as the debt laden airline waits for a bidder.
The bidder, fully qualified in all respects, has arrived now and the lenders need not look any further. The lenders need not follow bankruptcy procedures now for Jet Airways. Jet may not go bankrupt. Jet may fly again. Now the ball is truly in the lenders’ court.
This is perhaps the first instance in the history of Indian Aviation wherein the employees of a sick unit have come together with a proposal to takeover the unit and run it profitably. The ‘angel investors’ seem to be more comfortable investing through SWIP and JAMEVA. They themselves do not like to participate in the bidding process. This development further endorses the view that Jet failed because of bad management only.
This is perhaps the first instance in the history of Indian Industry wherein the workers have extended such an offer to the creditors. In case of Jet, the workers seem to enjoy the confidence of investors. The Labor Laws of India, too, favor such a development of socialism meeting with capitalism. The lenders may have to give preference to such a bid. As a matter of fact, it is a win-win situation for all concerned stakeholders.
Nalin Chandra, founder of NC Airways explains: “Unlike past procedures where the lenders used to routinely put the sick unit on an auction sale to recover something, Jet Airways’ employees today have come up with the ideal turnaround solution. This might set up a trend in other sectors as well for years to come. There can not be a better situation in which the worker and the owner compliment each other like this. The worker manages the show, gets his due payments, and the lender gets his due without any hiccup.”
And that’s where the lenders’ consortium should cash in on.
In India, demand for air travel has seen an unprecedented boom. By mid-2020s India is forecast to be the world’s third largest market for air travel. If, however, airlines’ lenders do not take a serious note of the initiative taken by Jet Airways’ workers, then this will be construed as a case of wasted opportunity. There will be more airline failures along with more NPAs to come in the near future.
Perhaps this is the only way wherein the lenders’ money can be recovered along with interest. If, however, the SBI-led lenders consortium refuses the employees’ offer, then the SBI will have only itself to blame for Jet’s agony and its losses.