Jet Airways crisis: Employees step in to bid for airline's revival

Employees consortium claims it can secure an investment of Rs 3,000 crore to kick-start operations and settle dues

A section of Jet Airways employees have come forward to bid for the carrier, which had suspended operations on April 17. 

An ‘employees’ consortium’ comprising pilots and engineers, among others, wrote to the 

State Bank of India on Monday, offering to secure an investment of Rs 3,000 crore to kick-start operations and settle dues.

SBI Capital Markets Ltd is engaged in finding an investor for Jet Airways, which shut operations due to lack of funds. 

Four parties, including the airline’s strategic partner Etihad Airways, private equity firms TPG and IndiGo Partners as well as sovereign fund NIIF are eligible to participate in the bidding process which closes on May 10.

Jet employees’ consortium is the second initiative outside the bank-led one to have envinced interest to take over the airline. British entrepreneur Jason Unworth, promoter of an airline start up, is the other person to show interest in taking over Jet.

“It is also realistic to understand that the employees would not have cash or credit needed to buy the company outright and such a process would need to be facilitated in order to generate adequate leverage. The contribution from employees would be realised from their future earnings and increased productivity, a value that can be quantified in advance with a fair degree of certainty. As per our initial estimates, contribution of the employee group to a hypothetical five-year stock ownership programme is likely to be over Rs 4,000 crore. In addition, we are also confident of securing an investment commitment of up to Rs 3,000 crore from outside investors,” the employees said in a letter to SBI.

The letter has been signed by Captain PP Singh, senior vice-president (operations), JetLite, BB Singh, manager-human resources, Captain Ashwani Tyagi, general secretary, Society of Welfare of Indian Pilots (a Jet pilots' association), and Ashish Kumar Mohanty, president of Jet Aircraft Maintenance Engineers Welfare Association.

“We recognise that legacy issues of high operating costs, overstaffing, unfavourable vendor or lease agreements and adverse debt/equity ratios are involved. We have discussed these issues informally with our colleagues in different sections of the company. They have reposed their confidence and faith in an employee-led turnaround plan,” the letter said.

Singh said the proposal is at a conceptual stage. “There is an employee-led turnaround plan like the one at United Airlines. The possible next step could be appointment of a consultant and creation of an employee trust. But all this would depend upon approval from lenders,” he said.

However some Jet employees questioned the initiative claiming it did not have wide spread support. "National Aviators Guild is recognised union of pilots and it has not given its consent for any such turnaround plan," a member pointed out.