SBI watches Jet Airways’ planes being de-registered

Aviation

April 8, 2019.

The State Bank of India (SBI) has formally opened an expression of interest process to attract bidders to take control of ailing carrier Jet Airways.

EOI documents state that the lending consortium that now controls the cash-strapped airline is seeking strategic and financial investors to take a stake of no less than 31.2% and up to 75%, on a fully diluted business.

The SBI defines strategic investors as those with “experience in similar sectors with domestic or global experience” of at least three years, and financial investors as private equity or other investment funds.

Both types of investors will have to self-certify that they have minimum committed funds of Rs10 billion ($144 million) for investment in the previous financial year.

Where the bidder is a consortium, no one party shall hold less than a 15% stake in the vehicle, and one party with “competent authority” will be appointed to lead it.

Responses to the EOI are due by 18:00 India time on 10 April, after which qualifying parties will be selected. They will then have to submit their binding proposals by 30 April.

SBI Capital Markets is acting as advisor to the lenders. In addition to SBI and Punjab National Bank, which have been previously identified as part of the lending syndicate, IDBI Bank, Syndicate Bank, Bank of India and ICICI Bank were identified among the seven other lenders involved.

The EOI documents did not make mention of the Rs15 billion interim funding facility that the lenders were to have advanced the carrier in recent weeks. Similarly, the documents did not disclose any proforma financial statements for the heavily indebted airline.

Last week, aircraft lessors Avolon and MC Aviation Partners filed requests to deregister seven Boeing 737-800s between them that are leased to Jet.

April 11, 2019.

Aviation regulator DGCA announced it de-registered seven Boeing 737-800 aircraft of Jet Airways on Wednesday, allowing its lessors to take the planes out of the country so that it can be leased to any other airline.

During the last few weeks, Jet Airways has been grounding its aircraft in tranches due to non-payment of dues to its lessors. While the airline has a fleet of about 119 aircraft, civil aviation secretary Pradeep Singh Kharola said on April 4 that only 26 aircraft of Jet Airways are flying “currently”.

The DGCA announced on its website that seven de-registered Boeing aircraft belong to lessors such as Crolly Aviation, Mardal Aviation, Allenwood Aircraft Leasing, Dungarvan Aircraft Leasing, Elphin Aircraft Leasing, Carlow Aircraft Leasing and Ballyhaunis Aircraft Leasing.

All aforementioned seven companies are based out of Dublin in Ireland. They had put in the IDERA (irrevocable deregistration and export request authorisations) requests with the DGCA on and around April 3.

The regulator also showed on its website that lessors have put in IDERA requests to de-register 24 other aircraft, which were leased to Jet Airways.

Once the lessor puts in the IDERA request for an aircraft, the DGCA checks if that plane has any pending dues with any airport, oil companies, etc. Once it is established that plane has no pending dues, the de-registration is permitted. The lessor can then take the plane out of the country and lease it to any other airline company.

Meanwhile, a European cargo services provider seized one of Jet Airways’ Boeing planes at the Amsterdam airport for non-payment of dues on Wednesday.

Also, for the third time in a week, national oil marketer Indian Oil Corporation on Wednesday stopped fuel supply to Jet Airways for non-payment of dues.

Due to cash crunch, the airline has been paying only part salaries to its over 16,000 employees which forced a section of its pilots on Tuesday to send a legal notice to the management, which is currently being headed by the lenders led by the State Bank of India.