India sees little scope for Jet Airways revival: government sources

NEW DELHI (Reuters) – India’s government sees little hope of a bidder emerging for debt-laden Jet Airways Ltd, two senior finance ministry officials said, even as thousands of employees plead with the government for a rescue.

Parties that had initially expressed interest in Jet, which is saddled with roughly $1.2 billion of debt, have so far failed to make firm bids to bail it out, increasing the odds that it could soon face bankruptcy proceedings.

“There is little scope in the revival of Jet,” said one official, adding that if a bidder emerged, the government was still willing to return slots to the private airline which have temporarily been given to rivals.

A second senior finance ministry official said it was only a matter of time before someone dragged Jet to the National Company Law Tribunal – India’s bankruptcy court – for recovery of dues from Jet.

It will most likely be one of Jet’s creditors and not its lenders that do so, said both the officials who spoke on condition of anonymity.

Unions have been pleading with the government to ensure the airline is rescued. Last week, in a letter to the prime minister seen by Reuters, its pilots union urged the government to intervene and speed up the bid process for the airline and stop the deregistration of its aircraft by its lessors.

Jet had a fleet of more than 120 aircraft but more than half have been deregistered and repossessed by lessors.

India’s aviation authorities have also been temporarily farming out Jet’s slots to rival carriers as airfares have soared in the wake of Jet’s shutdown.

Rival low-cost carriers have also been scooping up aircraft that were formerly operated by Jet from its lessors, and poaching hundreds of its pilots, cabin crew and other staffers.

The airline halted operations on April 17 after its lenders refused to provide further funds to keep it afloat.

Once India’s largest private carrier, it had more than 16,000 employees and flights to dozens of international destinations.

State Bank of India (SBI) said last month that it expected bidders to submit binding bids by April 30, and to complete the sale process this month. However, bankers involved in the process told Reuters last week that no binding bids had emerged.

“The banks have been advised to wait for the formation of the next government … before taking any decision on Jet’s fate,” the official told Reuters.

Prime Minister Narendra Modi is currently seeking re-election. His government has come under fire from critics and opposition parties for rising unemployment.

Despite this, senior government officials have opposed any bailout package for the airline arguing it would increase pressure to support other failed private companies.

The government is satisfied with the handling of the Jet crisis by banks and other institutions as it has thus far not become a major election issue, the second ministry official said.

Jet’s borrowings are small compared to those of other big defaulters such as Videocon and some steel companies, so lenders likely can wait for some more time before commencing bankruptcy proceedings, the official said.

An official at ICICI Bank, which has to recover over 5.4 billion rupees ($78.17 million) from Jet, said the bank sees little chance of any recovery without the government coming up with a rescue plan.

“We largely think our money in Jet is gone,” he said.