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UAE investor-led consortium to own 90% in Jet 2.0

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on October 22, 2020

As per the plan, the consortium plans to re-launch the full-service carrier with an initial investment of Rs10 billion.

The consortium led by a UAE-based businessman that won the bid to take over Jet Airways will get more than 90 per cent stake in the grounded airline, while the rest would be distributed among lenders and some of the employees, it is learnt.


Last week, Jet Airways’ creditors approved a resolution plan submitted by a consortium of UAE-based Murari Lal Jalan and UK-based asset management firm Kalrock Capital.


A former senior employee of the airline told Khaleej Times that as per the resolution plan, the consortium plans to re-launch the full-service carrier with an initial investment of Rs10 billion.


For this, the next step is to get the final go-ahead from the National Company Law Tribunal which is hearing the insolvency proceedings. The consortium, it is understood, is prepared to launch Jet Airways 2.0 within six months once the NCLT approval is obtained.


An industry source said another crucial measure for the new owners is to renegotiate contracts with various vendors including fuel retailers, aircraft lessors, and caterers. The new management also has to regain the airport slots that re-allocated to other domestic airlines by the government after the grounding of the embattled airline.


Jet Airways 2.0, which is expected to retain its brand identity and its business model of being a full-service carrier, is likely to operate only domestically in the first year.


Informed sources said Jalan and Kalrock plan to split their holding in Jet in a ratio of 51-49.


According to the resolution professional Ashish Chhawchharia of Grant Thornton, discussions are under way with  Etihad Airways on a new shareholding structure for the airline’s loyalty programme subsidiary Jet Privilege, now named InterMiles. Jet owns 49.9 per cent of the company while the rest is owned by Etihad.


Sources said the incoming owners would be offering about 9.0 per cent stake in the airline to lenders including SBI, Yes Bank and IDBI in lieu of their debt. Banking sources said financial creditors may have to take up to 90 per cent haircut on their dues.


Since the company is facing insolvency public shareholders will not gain anything out of the deal.  Before the insolvency case, Jet’s founder Naresh Goyal held 51 per cent stake while Etihad Airways held 24 per cent. As of end June 2020, Goyal as promoter held 25 per cent stake in Jet. Etihad as public shareholder held 24 per cent, while lenders hold 26 per cent, insurance companies, overseas investors and retail investors held the rest.


Jalan, whose flagship construction company MJ Developers is based in Dubai, has interests in real estate and infrastructure, construction, FMCG, dairy, travel and tourism, and industrial works. He currently has investments in the UAE, India, Russia and Uzbekistan.


In India, his investments include a major share of Agio Paper Industries, stakes in Medanta super specialty hospitals and Patanjali India Distribution.


Jet Airways, which had 16,000 employees when it stopped operating in April 2019 due to liquidity problems, now has 3,300 on its rolls. Currently, the airline has 12 aircraft on its boo

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.





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