Will the new management manage to revive Jet Airways ahead of March deadline?

The consortium of UAE-based businessman Murari Lal Jalan and UK-based private equity fund Kalrock Capital is rushing to restart Jet Airways’ operations, even though differences have emerged over who will fund expenses before operations commence, sources said.

The airline applied to the Directorate General of Civil Aviation (DGCA) for recertification of its air operator certificate in the last week of January.

The regulator is likely to inspect the airline’s preparedness to operate a flight in the middle of this month, after which it will be asked to operate a proving flight to demonstrate its ability to conduct flights safely and in accordance with rules.

“DGCA will evaluate all documents and manuals and carry out checks to assess the management capabilities likely from February 14-17, following which the proving flight will be operated in the last week of February.

"If things move on schedule, the airline will get back the licence as early as March 15,” said a person involved in the process.

The effective date of implementation has been extended twice to March 22.

In case the consortium is unable to get regulatory approvals the resolution plan will lapse automatically.

“Jet Airways shut down due to financial reasons and not due to safety or technical reasons. Hence, the process will be fast,” the person said.

The consortium has also completed other requisite processes like security clearance of three members of the new board, signing of letter of intent for aircraft, appointing departmental heads, and getting letter of support from maintenance and repair organisations and pilot training facilities.

“Letter of intent for five Boeing 737 NG aircraft has been signed while written letters of support have been obtained from MRO, pilot training centre and airports who are ready to offer slots and night parking.

"The Kalrock-Jalan consortium is showing full intent to restart Jet Airways even as there are ongoing differences with the lenders,” the person said.

The Kalrock-Jalan consortium did not respond to an email query.

A second person aware of the development said that differences have emerged as the consortium is not ready to invest funds before gaining control of the company while the lenders have stressed that they can only handover control after the new owners revive the airline’s licence.

“While, the consortium is of the opinion that they will not infuse equity into the company unless control is transferred and any expense till effective date is to be borne out of the existing balance of the company, the SBI-led consortium is opposing it saying they cannot release any more cash,” the person said.

“So, in the absence of any clarity, the consortium in its good faith is taking all steps to get the licence revived,” he said, adding that Jet Airways currently has a balance of over Rs 200 crore.

A possible solution could be where the lenders reimburses expenses incurred by the consortium.

Some former Jet staffers, however, believe the consortium is not serious about reviving the airline, given the delays in funding.

In December, the consortium had even approached NCLT saying that it is ready to infuse Rs 100 crore in the company and take control. However,the court didn’t agree saying that revalidation of the airline's permit is a condition precedent for the transfer of shareholding and extended the date of the process.

An executive of a bank that is part of the resolution process said the consortium was supposed to bring in Rs 350 crore as equity infusion within the first 180 days for expenses like payment to financial creditors and working capital expense.

“We are not comfortable releasing any more funds. Let the court say that,” he said.

Photograph: Punit Paranjpe/Reuters