Jet’s revival hits snag as employees units move court
The revival journey of the grounded Jet Airways, initiated by a UAE-based investor, hit a sudden speed bump as two employee unions challenged the airline’s resolution plan, demanding higher compensation from the new ownership.
India’s top bankruptcy court, the National Company Law Appellate Tribunal (NCLAT) on Wednesday gave two weeks’ time to the counsel of the new owner consortium to respond to claims by the employee associations.
Industry sources said the new crisis could result in another delay to the revival process of one of the most sought-after Indian carriers, which was once partly owned by the UAE carrier Etihad. The re-launch process has already been slowed for months due to issues over slots.
The employee unions, Bhartiya Kamgar Sena and the Jet Airways Cabin Crew Association, have both asked NCLAT to force the airline’s new owners to increase their compensation to former employees. Jet Airways employees are demanding jobs at the new airline and far more than the 4.0 per cent of dues offered.
Employee unions have also sought intervention from aviation minister Jyotiraditya Scindia for resolving issues of employment under the new owners of the airline and clearance of social security dues that have accumulated under the previous management of the airline.
Before the employee dispute, Jet Airways spent several months to get the government to confirm whether it would receive the slot it was allotted while in operation. The director general of Civil Aviation ruled out the request, but a court ruled that Jet must get at least some of the original slots.
The owners’ consortium formed by the UAE-based entrepreneur Murari Lal Jalan and Kalrock Capital won the bid to revive debt-ridden Jet Airways in October 2020.
At the peak of its operations four years ago, Jet Airways used to operate 50 flights per day to 10 cities in the GCC, including three airports in the UAE.
The top bankruptcy court cleared the consortium’s proposal to revive the airline on June 22. While the airline had admitted claims of around Rs150 billion, the consortium has offered to settle claims of Rs4.75 billion of financial and non-financial creditors
Already, the airline’s creditors have taken an almost 95 per cent haircut under the resolution plan. The winning consortium has proposed to pay Rs3.85 billion against claims of Rs78.08 billion raised by its financial creditors.
As per the plan, a welfare trust will be formed of all the staff and it will hold 0.5 per cent stake in the airline and 76 per cent stake in its ground handling subsidiary. Employees and workmen would be paid Rs11, 000 and Rs22,800 respectively. Each of the workmen would be given a phone, laptop or an ipad through a lottery basis and ticket vouchers worth Rs10,000.
There were around 9,000 employees with the airline in June 2019 and that figure has dwindled to around 3600. In case 95 per cent of staff do not vote in favour of the proposal it will automatically lapse. The 0.5 per cent stake reserved for the staff and Rs80 million allocated for making cash payments to them will be given to financial creditors.
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