With three of the four potential bidders so far failing to show any enthusiasm in taking the Jet Airways deal forward, the airline is now left with no option but to move towards insolvency.
However, the lenders led by State Bank of India (SBI) said they will wait until May 10 deadline for the submission of final bids, before deciding on the next course of action.
Etihad Airways, TPG Capital and Indigo Partners are learned to have not signed the non-disclosure agreements though it is necessary for conducting due diligence. "Jet Airways is as good as dead now. The clock was ticking for quite some time," said a source from one of the lending banks.
The bankers aware of the bidding process said that the potential bidders have been wary of the Rs 13,000 crore negative tangible worth of Jet Airways, and therefore, not sure whether they will be able to make any profit out of it. However, one of the airlines which did not participate in the EoI pegged the liability to be around Rs 25,000 crore. The same source said that in case of the insolvency process, the banks are unlikely to get much as airline business is mainly asset-light, and therefore, there is nothing much to recover.
Mark Martin, founder and CEO of Dubai-based aviation Martin Consulting, said the lenders have played a very sad role in bringing Jet Airways to the situation it is in at present. "There seems to be no hope left now," said Martin.
Jet Airways, which till a few months ago had 119 aircraft in its fleet and was even contemplating investing in financially ill national carrier Air India, has been eagerly awaiting an investor to take over. The company had been fighting for its survival for the last one year. The carrier was forced to stop all flight operations on April 17 after its lenders declined to extend more funds to keep the carrier going. In the final weeks before it declared its inability for fly any further until infused with funding, the airline did not even have money for basic operational expenditure including paying for fuel, aircraft lessors, vendors, and salaries to its 16,000 employees.
On March 25, the lenders had announced their decision to set up of an interim management committee, which will manage the daily operations of the crisis-ridden airline till lenders are able to sell/issue shared to a new investor. The lenders also made public their intentions to infuse Rs 1,500 crore as interim funding to bring normalcy into the running of the airline. After holding on for past several months, Jet Airways founder Naresh Goyal finally stepped down from the Board and chairmanship of the airline, bringing down his share (along with family) to half of what it was at 51%. Goyal's controlling stakes had become a major hurdle for the investment as the potential lenders, including Tata Group and Etihad, wanted him to step down.
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The bankers aware of the bidding process said that the potential bidders have been wary of the Rs 13,000 crore negative tangible worth of Jet Airways, and therefore, not sure whether they will be able to make any profit out of it. However, one of the airlines which did not participate in the EoI pegged the liability to be around Rs 25,000 crore. The same source said that in case of the insolvency process, the banks are unlikely to get much as airline business is mainly asset-light, and therefore, there is nothing much to recover.
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