New Delhi: One section of Jet Airways’ employees has already proposed to take over the management control of the grounded airline and arrange up to ₹3,000 crore from external investors which can infuse fresh lease of life in the crisis ridden Jet Airways.
Unions have been pleading with the government to ensure the airline is rescued. Last week, its pilots union urged the government to intervene and speed up the bid process for the airline and stop the deregistration of its aircraft by its lessors.
Jet had a fleet of more than 120 aircraft but more than half have been deregistered and repossessed by lessors.
India’s aviation authorities have also been temporarily farming out Jet’s slots to rival carriers as airfares have soared in the wake of Jet’s shutdown.
Rival low-cost carriers have also been scooping up aircraft that were formerly operated by Jet from its lessors, and poaching hundreds of its pilots, cabin crew and other staffers.
The initiative shown by the employees has further got a boost. A group of frequent flyers of the cash-strapped airline has approached the key lenders, including State Bank of India, ICICI Bank and Punjab National Bank, to submit the ‘Revival of Jet Airways Plan’ or ‘Roja’. Today Jet is saddled with roughly $1.2 billion of debt.
Claiming to be reputed professionals and minority shareholders in Jet Airways as well as nine banks that have lent money to Jet, the group has proposed a leveraged buy-out plan (LBO) to revive the grounded airline.
The group of professionals, led by Sankaran P. Raghunathan, has given a presentation on the airline’s revival plan to various stakeholders, including pilots, engineers, employee unions and bankers.
As per the plan, the employees of Jet Airways would first take control of the company. They will take loan from existing lenders and invest in the company, eventually becoming part-owners.
The Jet executives who are fronting the move represent various functions at the airline (ANI)
A management buyout is not a bad option for Jet
“The banks can give ₹1,500 crore loan to the employees. This is six months’ salary of each employee as personal loan. The employees will use this money to buy out 51 per cent stake in the company from SBI and 12.5 per cent from Etihad. The balance ₹200 crore would be given to the company for new shares. This way the employees will control Jet Airways.
In the next step, the plan is to raise money involving the frequent flyers.
Accordingly, the banks can be persuaded to give a personal loan to all those who want to buy four tickets each for ₹10,000 which would be valid for two years. By pre-selling these tickets, as much as ₹8,000 crore could be raised.
Jet Airways employees, already in controlling position, would pass a resolution to authorise the additional issue of shares on a preferential basis to all those who buy the ticket packets — 100 shares each for ₹150 each — and thus raise ₹12,000 crore.
“The ₹20,000 crore raised will now be used for operational working capital and for repayment to creditors over five years,” the presentation said.
Facing severe financial crisis, Jet Airways had on April 17 announced to temporarily suspend its flight operations. The airline continues to be grounded and its revival depends upon fresh fund infusion by the investors.