Jet Airways revival hits fresh snag as banks resist on funding

Bloomberg

Lenders to bankrupt Jet Airways India Ltd are resisting a court-approved resolution plan, further delaying the former No. 1 private airline’s return to the skies, according to people
familiar with the matter and email communications seen by Bloomberg News.
The primary dispute is about whether the new owners of Jet Airways need to pay more money into the pension funds of ex-employees, the people said, asking not to be identified because they’re not authorised to speak publicly about the matter.
Banks, led by State Bank of India, say Jet Airways’ new buyers — Murari Lal Jalan and Florian Fritsch, chairman of London-based Kalrock Capital Management Ltd — should
pay an additional 2.5 billion
rupees ($30.1 million) into
the retirement kitty, the people said, an ask supported by the email exchanges reviewed by Bloomberg.
The new owners meanwhile have indicated that extra money wasn’t part of the already agreed upon resolution plan and instead must be taken out of the banks’ dues, the people said. All parties are now awaiting fresh guidance from the bankruptcy court.
A representative for Jet Airways, which also represents the consortium led by Jalan and Fritsch, declined to comment. State Bank of India and Ashish Chhawchharia, the court-appointed professional running the carrier’s insolvency, didn’t immediately respond to messages and phone calls seeking comment.
A revival of Jet Airways, previously majority owned by former billionaire Naresh Goyal, is key
to burnish the image of Prime Minister Narendra Modi, who
is projecting himself as a
market-friendly leader keen to reduce state interference in private enterprise ahead of elections in 2024.
For Jet Airways, a second coming could exemplify how new bankruptcy rules can allow beleaguered carriers to spring back in the South Asian nation, known for its cut-throat aviation market and fare wars that have killed off several high profile players over the years.
Jet Airways collapsed in 2019 under a lot of debt after years as India’s top private airline.
It had promised to start flying again in March this year but has struggled to order new aircraft because lenders have been reluctant to take on fresh liabilities. Its new owners also still haven’t reached an agreement about formally taking over the airline, the people familiar with the matter said, limiting the ability of Jalan and Fritsch to infuse more funds and order planes.
The issue of paying more money into the pension funds of former employees came about after a fresh case was filed at
the tribunal after the court-approved resolution had been
finalised.
The snag also threatens to set back a process of about three years that was to see banks recover about 5% of the some 78.1 billion rupees they were owed. Bloomberg News reported in late August that Jet Airways was in advanced talks to order about 50 Airbus SE A220 aircraft.
The carrier was also in discussions with Boeing Co and Airbus to potentially place a “sizable” order for the 737 Max or A320neo families of jets.