10 unanswered questions in the Jet Airways drama

A failing airline with two-thirds of its fleet grounded has witnessed so much drama around it, that a person close to the events was compelled to draw comparisons with Netflix action series. Jet Airways employees, including the crew, are not amused by the Netflix-like twists and turns in the much hyped-up resolution plan to keep the airline flying. While the state-owned banks are stitching together a last-minute rescue plan to ensure a private airline doesn’t go down ahead of the Lok Sabha elections, there are at least 10 unanswered questions on how and why the Jet issue has been reduced to a drama with no clear plot or ending.

Let’s start with the Jet board meeting of February 14, when the draft resolution plan to convert lenders’ debt to equity was approved. How did the Jet board give an in-principle nod to a plan which was tweaked and changed so many times after that? In other words, what exactly was the board approval for if the contours of the deal underwent so many changes after that?

Two, the outcome of the Jet EGM on February 21came as a puzzle. What had looked like a walkover earlier turned out to be not quite so subsequently. Why is it that the voting pattern at the EGM did not capture what was in store?              

Next, the memorandum of understanding (MoU) between the two parties—Etihad Airways with 24 per cent holding and Jet founder chairman Naresh Goyal with 51 per cent—has been a mystery in the piece. So, the third question with no answer is this. How was an MoU struck without any ‘’understanding’’ between the two partners who are not known to be fond of each other? Soon after the MoU, based on the lenders-led resolution plan, was discussed at the Etihad board meeting on March 11, the silence emanating from Abu Dhabi made it quite clear that it was a no-go deal.  

Fourth, what was it that Etihad CEO Tony Douglas wanted and SBI chairman Rajnish Kumar refused, at their meeting in Mumbai on March 18, that not only did the resolution deal fail but the Abu Dhabi airline decided to exit Jet completely?

The fifth question arises from there. Did Douglas fly down to Mumbai earlier this week with the purpose of making an offer to SBI that Etihad was willing to sell its 24 per cent share in Jet at a discounted rate of Rs 150 a share, making it a Rs 400-crore deal?

Sixth, if Etihad had already decided to exit the venture, what gave lenders, especially SBI, so much confidence that they promised a resolution plan would be done and dusted within a week? On March 15, bankers had said Jet resolution would come in a week. By March 18, they were piecing together a Plan B.  

Seventh, why did Naresh Goyal and son Nivaan Goyal fly to the Qatar Airways headquarters in Doha to give a presentation soon after hearing a ‘’no’’ from long-time partner Etihad? Did they really think it was worth it, while names of other possible contenders floated around without any evidence?    

Eighth, wouldn’t state-owned banks putting in additional funds in Jet mean another liability for the government? And can our system afford it, especially as Air India continues to be in the bucket list for divestment even after a failed effort by the government recently to sell it?

Ninth, should the policy makers still talk about preference for Indian ownership over foreign when a consortium of banks is set to take control of what used to be a top airline of the country not too long ago? Don’t the banks have their hands full already?

The tenth question is about the regulator. Why is it that the Directorate General of Civil Aviation (DGCA) has not taken any stand yet that would send out a message to businesses about shaping up or shipping out? Even with mass grounding and mass cancellations, Jet has not been told to stop passenger bookings yet. Shouldn’t the regulator ensure both safety and convenience of passengers? In this case, safety may be compromised as pilots are under stress with no payment of salaries since December. And convenience has been a casualty as nobody knows which Jet flight would be grounded next, throwing passengers’ plans in disarray.                                            

This is not an answer to any of the 10 questions, but it’s no rocket science that quick fixes don’t work in any serious business. Jet is no different.  


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel