Jet Airways Pilots to file a plea at NCLT for non-payment of salaries

Jet Airways Pilots to file a plea at NCLT for non-payment of salaries

Aviation India News

The pilots union of Jet Airways (India) Ltd will file a plea against the grounded airline at the National Company Law Tribunal (NCLT) for non-payment of salaries and not providing a provision for gratuity payment to its staff, two senior members of the union said.

The union, the National Aviators Guild (NAG), counted about 1,100 of the airline’s 1,600 pilots as its members before the grounding of the carrier. “We (NAG) will file a plea at Mumbai’s NCLT early next week,” said one of the two people, requesting anonymity.

“The airline hasn’t paid us salaries since January. Also, they haven’t made any provisions for gratuity, which needs to be addressed by the court.”

Jet Airways, which stopped its operations in April after running out of cash, has not paid salaries to its senior employees, including pilots, engineers and senior management, since January. The debt-ridden carrier has also not paid other employees since March. Jet Airways spent 781.19 crore as remuneration for its employees during the October-December 2018 quarter.

“While some pilots have landed themselves jobs at other airlines, there are several pilots, especially junior pilots, who have found it difficult to get jobs,” said the second person cited above, adding that National Company Law Tribunal may well be a last-ditch effort to recover dues.

Meanwhile, in a major setback to the lenders’ revival/sale plan of the grounded Jet Airways, two operational creditors — Shaman Wheels and Gaggar Enterprises– on June 10 moved the NCLT seeking bankruptcy proceedings against the airline.

The tribunal issued notices to Jet Airways and banks which own the airline now and posted the matter for further hearing on June 13 when it will decide on admitting or rejecting the bankruptcy pleas.

The pilots union will jump the queue ahead of secured creditors if Jet Airways heads to liquidation, said Ravi Kini, managing partner of law firm MV Kini and Associates.

“Under IBC (insolvency and bankruptcy code), once a case heads for liquidation the waterfall mechanism comes into effect. Under waterfall mechanism the dues of workmen are settled first before the secured creditors,” Ravi Kini said, adding that unionized pilots of Jet Airways have good chances of recovering their dues and will need to approach the court as pilot workmen.

The National Aviators Guild’s plans to approach National Company Law Tribunal could further impact lenders’ recoveries from Jet Airways. In case Jet does not end up being liquidated and insolvency is resolved then the new investor who bails out Jet would need to take on the liability of Jet, including salaries, Kini added.

In any case, if Jet Airways is admitted to the National Company Law Tribunal, under bankruptcy resolution lenders may recover only a fraction of the 8,400 crore the airline owes them.

The total liabilities of the airline, including unpaid salaries and vendor dues, are nearly 15,000 crore.

Shares of Jet Airways Tuesday plummeted nearly 15 per cent amid reports that the Hinduja Group and Etihad Airways may not proceed with plans to resurrect the debt-ridden airline.

The scrip tumbled 14.41 per cent to Rs 107.15 — its 52- week low — on the BSE.

At NSE, shares plunged 14.82 per cent to hit one-year low of Rs 106.30.

According to a media report, Hinduja Group and Etihad Airways PJSC may not proceed with plans to resurrect Jet Airways.