The airline’s lenders want proceeds from the rentals of its aircraft.
Jet Airways' financial troubles from its first stint have come back to haunt it again. The airline still owes money to several lenders and even devised a plan last year to start clearing the payments. Now, the group of lenders led by one of India's leading banks is threatening the carrier with insolvency if it does not pay them the proceeds from rentals of its aircraft.
India is set to see two airlines starting operation soon – Akasa Air and Jet Airways. However, the difference between the two is that while Akasa is starting with a clean slate, Jet continues to be haunted by its troubled past.
Jet owes a lot of cash to many lenders and stakeholders, including ex-employees and ticket claimants. So, any source of revenue for the airline is being carefully observed, with attempts being made to direct the funds to those demanding their money back.
According to The Economic Times, lenders led by the State Bank of India are threatening to push Jet Airways into liquidation if it fails to distribute the proceeds from its aircraft rentals among the financing banks.
The report also states that Jet's aircraft rentals to Air Serbia have yielded around $13.5 million so far. A person familiar with the matter said,
“At a meeting held earlier this week, the banks conveyed to the winning bidder that they will apply for liquidation if lease rentals are not distributed to verified lenders.”
In June 2021, the National Companies Law Tribunal (NCLT) approved Jet's insolvency resolution plan allowing it to restart its revival process. In December, Jet approached the relevant authorities, requesting to fast-track the debt settlement process.
The carrier approached the NCLT again and informed December 22nd, 2021, as the "effective date" when they wanted to start implementing the plan.
ET states that Jet's winning bidder, the Jalan-Kalrock consortium, has offered staggered payments of around $47 million. These include around $23 million upfront payment and $24 million over two years after the implementation of the plan. Lenders would also receive a 9.5% stake in the airlines. But they are also entitled to some payment from the sale of property owned by Jet Airways.
Jet has sought about a week's time to respond to the lenders' demands regarding its aircraft rentals.
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The carrier has said that it plans to start operations later this year, possibly in September. It received its AOC in May and is now looking to finalize an aircraft deal for future operations.
While it is in talks with all major aircraft manufacturers, several reports suggest that Jet is close to signing a deal with Airbus for around 50 A220 jets.
Hopefully, the airline can iron out its financial issues and reach an agreement with lenders for a successful relaunch this year.
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Source: The Economic Times
Journalist – With a background in publishing and digital media, I like to combine my love for aviation with my passion for storytelling and reporting. I’m a keen observer of ever-changing aviation trends around the world and particularly in India. I also keep a close eye on fleet development of all major carriers and their subsequent impact on regional and international routes. Based in New Delhi, India.