Jet Airways employes at a peaceful demonstration at Jantar Mantar in New Delhi on Thursday | Photo: Sanjay K Sharma
Jet Airways, which temporarily suspended operations on Wednesday, could soon find itself fighting at insolvency tribunals if none of the bids to save the airline turn out to be feasible.
The bids received for Jet will be opened on May 10. “The Insolvency and Bankruptcy Code option is back on the table. If none of the bids are accepted, the airline will face insolvency proceedings. The bids are the last chance to save the airline,” said an official, indicating liquidation may be a reality.
Meanwhile, a day after the airline ceased operations temporarily, government officials were struggling to understand why the lenders denied emergency funds even after giving verbal assurances on providing Rs 1,200 crore.
On March 20, State Bank of India Chairman Rajnish Kumar had met Union Finance Minister Arun Jaitley, along with senior officials including Nripendra Misra, principal secretary to the Prime Minister.
After the meeting he had said taking Jet to the insolvency court was not an option as it would lead to complete value erosion of the company. According to the plan then, the lenders, as part of the resolution process were looking to infuse around Rs 1,200 crore into the airline as emergency funding.
That did not come to pass, as of this Tuesday, the airline needed an emergency funding of Rs 983 crore to survive, which lenders, including SBI and PNB, did not provide.
“We (the government) were optimistic because the lenders were optimistic that the airline could be saved. The state-owned lenders, in their briefings to the political leadership, gave the impression that the emergency funding would be provided. Nobody knows why that did not happen, and why so many airline jobs were put at stake,” a senior government official told Business Standard.