Edition 71
On Thursday, the Hon. Supreme Court of India ruled for liquidation of Jet Airways – the oldest private airline in the country, which suspended operations in April 2019 as it ran out of cash. The airline had nearly run out of cash around 2012 as well when it was locked in a fierce battle with Kingfisher Airlines. Etihad invested in Jet Airways and Kingfisher went kaput. A decade later, Jet Airways faced the same. There was an inherent problem with the operations and cash flow. The Etihad investments did well to sustain for a while. The airline kept reporting profits on the back of money coming in the form of investments into the frequent flyer program which was valued and sold separately. This was followed by assets being monetized starting with the planes going from finance leases to sale and leaseback raising some operating cash, until the airline ran out of just about everything.
The subsequent steps meant that it was more of a test of the then newly formed IBC ( Insolvency and Bankruptcy Code). It seemed like a success with the Jalan – Kalrock consortium (JKC) winning the bid, with the other player being flybig (which started on its own). JKC went from one problem to another, even as it continued with an office along with appointing some known faces in aviation with a track record to talk about. Yet, the ping-pong between the consortium of creditors and the winning bidder continued with one court case over another. The chicken and egg situation remained unresolved, to an extent that the intention of winning bidder became the talk of the town. The casualty? A handful of planes were already sold and the winning party had slots for conversion. The threads got entangled to an extent that it was impossible to simplify it anymore and the last hammer came on November 07.
This now throws out more questions about the process and what should be the cut-off in future. Go FIRST which went down in 2023 has moved to a faster resolution though its planes were stuck in India, unlike Jet Airways. What is more important to understand is that, while this is normal for Indian court process timelines – it does not bode well for other airlines, since the leasing industry looks at India as a whole and not airline specific. Hopefully some money is recovered post this judgement. Much like the resolution, this also is a case of justice delayed is justice denied.
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