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No takers, Jet Airways set to fly into liquidation

With no serious expression of interest, piecemeal sale of Jet Airways remains the only option

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Jet Airways, one of the premium airlines in India which was grounded in April due to cash starvation, is now headed for liquidation in the bankruptcy court after it received no serious expressions of interest (EoIs) despite the banks extending the deadline to August 10.

Fresh capital of Rs 13,000 crore is required to keep Jet Airways up and running and no investor is willing to bet big on the airline's revival, two bankers told DNA on condition of anonymity. Banks are also not agreeable to providing additional debt to the sick airline, the sources said.

As reported first in DNA, the extension of the deadline to submit the EoIs was done at the behest of Etihad Airways, which holds a 24% stake in the airline. But the national carrier of United Arab Emirates did not submit any bid. "Etihad remained engaged in the process, but despite the endeavours of everyone involved, there remained very significant issues relating to Jet's previous liabilities. Regrettably, in these circumstances, it was neither feasible for nor responsible of Etihad to reinvest in Jet at this time," the airline said.

The rescue of the beleaguered airline now looks impossible.

"We received no EoI for Jet Airways which could be taken forward. Liquidation in NCLT seems to be the only way out. Etihad wanted Securities and Exchange Board of India exemption for an open offer, but they failed to get it," said a banker who is privy to the company's financial situation.

Lenders of Jet Airways will, however, keep the option of possible takers open till the end of the resolution period. On June 20, the Mumbai bench of the NCLT admitted Jet Airways under the Insolvency and Bankruptcy Code (IBC) after lenders referred it to the bankruptcy court. NCLT has asked the banks to find a revival plan for Jet Airways in 170 days as against the normal practice of 270 days, considering that the salaries of the employees needed to be paid. Failing this, the airline would have to go for liquidation.

"The government did not cancel the airline's licence or its flying slots. If the airline returns to operations, it would get back all its slots. However, Sebi does not want to give an exemption on the open offer clause, and so Etihad won't go ahead to raise its stake. There seem to be no takers for Jet Airways," said the banker.

The Jet Airways' slots have now been distributed between Spice Jet, Indigo and Vistara.

A consortium of 26 lenders, led by State Bank of India admitted Jet Airways to the bankruptcy court to recover their dues of over Rs 8,500 crore, after having failed to sell the airline as a going concern.

Apart from banks, the airline also owes over Rs 10,000 crore to its vendors, including the aircraft lessors, and over Rs 3,000 crore to its employees, who have not been paid since March. The airline has been having negative net worth for long and has run a loss of over Rs 13,000 crore in the past few years.

Late last month, the resolution professional Ashish Chhawchharia had floated EoIs for selling stake in the airline that stopped flying mid-April. The deadline for receipt of EoIs was kept as August 3 and then extended by a week on request of Etihad.

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