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Jet Airways: The Road to Revival

Jet Airways shares surged 5 per cent as soon as the news of the approval of Jalan Kalrock Consortium's resolution plan by the Mumbai Bench of the National Company Law Tribunal (NCLT) broke out. The airline's stock ascended expeditiously to hit the 5% upper circuit limit on both BSE and NSE. The Consortium involving UAE-based business tycoon Murari Lal Jalan and U.K.-based Kalrock Capital is solely responsible for freeing the decks for the airline’s takeover and a possible revival. Jet Airways is finally looking at the possibility of hitting the skies with renewed zeal, enthusiasm, and new owners.

Before we move on, we must capture the backdrop and explore the airline's majestic rise and subsequent downfall.

Jet Airways, India's premier private airline firm, was incorporated in 1992. It was initially backed and financed by Naresh Goyal (60%), Gulf Air (20%) and Kuwait Airways (20%). However, the latter two foreign investors had to exit in 1997 following a government ordinance. Therefore, Naresh Goyal ended up as the full-fledged autonomous owner by purchasing the remaining 40% stock. By 1993, Jet had already conducted more than fifty thousand passengers across 12 destinations.

Jet Airways rose exponentially and was in a state to acquire other companies. It purchased Air Sahara for $500 million in 2007 and renamed it JetLite, a low-cost carrier. Jet Airways continued its dream success ride, acquiring more airlines and partnering with certain principal players like Kingfisher. It also won multiple Best Airline Prizes. However, their success was short-lived.

By the end of 2018, Jet Airways' precarious finances became publicly evident. Nearly 25 years after its first flight, the situation began worsening. After almost half a year of struggle, the company ran out of funds. A massive 123-aircraft fleet was cut down to a narrow seven-plane service. The lenders refused any additional emergency funding to the airline. Therefore, Jet was deemed insolvent, ultimately leading to the remaining planes being grounded and immediate cessation of operations.

Analysts and experts have designated several reasons that directly or indirectly played pivotal roles in the airline's collapse. The decision to purchase Air Sahara was one of them. This deal gave the organisation constant and unending financial, legal and human resource woes. Additionally, Mr Goyal's mismanagement and reluctance in laying employees off were detrimental to the business. The Jet management, on the other hand, underestimated and miscalculated low-cost carriers like IndiGo, SpiceJet and GoAir and, instead, clung to serve the corporate audience only. This blunder made them lose out on the rapidly growing and immensely productive middle-class flyers. The inconsistencies in global crude prices only aggravated the looming crisis. The weak rupee further increased fuel prices for the airlines, therefore, adding icing to the collapse. Jet Airways miserably failed to manage its books and was caught off guard by this regular phenomenon of the aviation industry.

In June 2019, after receiving no satisfactory proposals from Etihad Airways and Hinduja Group, the National Company Law Tribunal admitted the insolvency petition against Jet Airways for bankruptcy proceedings with a debt of $1.2 billion.

Since then, Jet Airways has been undergoing a resolution process under the Insolvency and Bankruptcy Code (IBC), which mandates a time-bound method to settle insolvency. When a lapse in repayment occurs, creditors seize the debtor’s assets, and decisions must be arrived upon to resolve insolvency. Under IBC, both debtor and creditor can start recovery proceedings against each other, depending on the existing circumstances.

In October 2020, Jet Airways' Committee of Creditors (CoC), led by the State Bank of India, had voted the Kalrock Capital and Murari Lal Jalan consortium as the winning bidder and approved their submitted resolution plan.

The plan affirms that corresponding to the claims totalling ₹15,432 crores admitted from operational and financial creditors, the Jalan-Kalrock consortium has proposed to pay creditors, including banks, ₹1,183 crores over the next five years.

The new promoters have agreed to pay ₹280 crores in cash after 180 days of taking ownership of the now grounded airline. The second tranche of ₹195 crores would follow in 730 days. The Consortium has consented to ensure the balance payment through a combination of cash, proceeds obtained from the trade of assets and the annual cash flows created by the airline.

Under the now approved plan, banks would also acquire a 9.5% stake in the airline. The Consortium would retain 89.79%. Additionally, employees would get to own 0.5% of the airline’s equity capital. Public shareholding would stand at 0.21%.

The plan also mandates the constitution of a seven-member monitoring committee. Three members each would be appointed by the consortium and the financial creditors, respectively along with an independent insolvency professional appointed by the financial creditors.

Jet Airways might have to face several hiccups before it can gracefully hit the skies. It is yet to collect various approvals and certifications, including an air operator’s permit, new owners' security clearances, airworthiness of planes, permission to import planes, etc. If the new owners decide to rehire old employees, the induction of pilots and their refresher training could easily take two to three months. Similar pieces of exercise would also await the cabin crew and engineers. In addition to this, a dedicated administration team would have to be installed to oversee the airline operations and help negotiate new contracts for supplying a plethora of flight-related services, including fuel, catering and ground handling.

The most dominant issue, however, would be that of the availability of the slots. The consortium might have to decide to withdraw if the coveted time slots are not assigned to them. After Jet was grounded, the time slots in its possession were disbursed to other airlines. Getting back the usual timings might still be more manageable than obtaining premium slots, such as early morning departures from New Delhi and Mumbai, which Jet Airways had previously held.

The concurrent condition of the airline industry is also a huge concern. CAPA has forecasted massive losses of $8 billion for Indian airlines over two years of the pandemic. Founded in 1990, CAPA - Centre for Aviation, is an integral component of the Aviation Week Network. It is one of the most credible specialists of market statistics for the aviation and travel business in the world. Evaluations further state that the airlines would expect almost $5 billion of capital infusion merely to withstand. The number of domestic passengers shrivelled to 53 million in FY21 from 140 million in FY20. In these circumstances, it won't in any way be comfortable for a new player to enter and dominate.

Despite the recent silver lining for the airline, it remains to be seen whether Jet Airways can deliver the Joy of Flying, or if it would be made to ground forever!

Written by: Gaurav Chakraborty (

Edited by: Divij Gera


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