Kalrock-Jalan consortium seeks two more months to revive Jet Airways

Makes application to NCLT; Rising cost of reviving operations is already a bone of contention between consortium and lenders

The Kalrock-Jalan consortium has sought two more months to complete regulatory requirements to revive the air operator’s certificate of Jet Airways. The consortium has made an application to the National Company Law Tribunal in that regard.

Last June the NCLT cleared the consortium’s plan to revive Jet Airways. As per its conditions the consortium has 270 days to implement the plan which includes securing air operators the certificate. The deadline ends on March 22 forcing the consortium to seek an extension.

As per its original plans the consortium plans to restart the operations with six Boeing 737 aircraft by June.

“The consortium will need more time and hence an application has been made,” said an executive aware of the matter. The monitoring committee which comprises Jet Airways resolution professional and lenders is the respondent.

The consortium did not respond to an email query.

Jet Airways suspended operations in April 2019 due to a cash crunch.

While the Jalan-Kalrock consortium had sought waiver of some of the processes including the probing flight saying that the grounding was due to financial reasons and not due to operational or safety issues, aviation regulator DGCA said that the airline has to complete all the procedures of the licensing process.

The licensing process, known as CAP 3100 has to be fulfilled by all operators looking to start scheduled air transport service and requires them to show that a system is in place to operate aircraft safely. This requires setting up an organisation structure, hiring pilots and cabin crew and having training and engineering set up in place.

“Rules say that any airline whose licence is suspended for two years have to complete all the process to regain it. DGCA is following it,” said an official. In case of Jet Airways its licence or operations certificate is dormant.

The regulator is yet to carry out a review of operational preparedness. Induction of two used Boeing 737s for demonstration flights too has been delayed.

Sources said that the process has been delayed because of delay in leasing of aircraft. As per the original plan aircraft were to be leased through GIFT City, Gujarat but this is proving costlier than doing it offshore.

“Unfortunately, the previous plan of transferring the lease within India from the domestic operator was not successful as it was working to be costlier than Dubai and Singapore. So now the aircraft will be flown out of India, get deregistered and then be transferred to the licence of Jet Airways. This increased the time of the entire process,” said a person involved in the process.

Rising cost of reviving operations is already a bone of contention between the consortium and lenders over who would fund the pre-operative expenses to revive the airline’s license.

Sources, however, said DGCA has given a letter of support to the new owners that the process will be completed expeditiously if the terms set by the aviation regulator are satisfied. The consortium is likely to inform the NCLT on March 22 about it.

“The aviation regulator has not given any timeline but has mentioned what process has been completed and what is still remaining,” the person mentioned above said.

The consortium however will need backing of the lenders to execute its plans. “The lenders are evaluating progress of plan implementation and will take a call. There are concerns about delay in revival and this will add to resolution process costs. These costs related to security, day to day operations and maintenance of aircraft are being taken care of by banks. The consortium has budgeted only a certain amount for these and any increase will diminish the amount due to banks as part of revival process,” said a banker.

Earlier this month the consortium named SpiceJet’s former COO Sanjiv Kapoor as the chief executive officer of Jet Airways. It has also appointed former Sri Lankan CEO Vipul Gunatilleka as the airline’s chief financial officer.

“I always believe in investing in human capital and by having Sanjiv as CEO and Vipula as CFO, I am certain Jet Airways will reclaim its lost glory and surpass everyone’s expectations,” Murari Lal Jalan, lead partner of the consortium, and non-executive chairman of Jet Airways said earlier this month.