A bid for the ailing Jet Airways of India has been subnmitted by Middle Eastern carrier Etihad Airways, announced the State Bank of India (SBI), a unit of which is conducting the process of sale of the near bankrupt Indian airline.
Jet Airways currently has a bank debt of about $1.2 billion and is up for sale – bids for which have been invited by the SBI, which closed on Friday.
According to reports quoting a spokesman for the Middle Eastern carrier, there is renewed interest in reinvesting the Indian airlines by Etihad which already owns a minority stake in the company. He however added that Etihad “cannot be expected to be the sole investor” and “additional suitable investors would need to provide the majority of Jet Airways’ required recapitalisation.” No indication was given by Etihad about whether it was on the lookout for a potential majority stake holder in the airline.
In its attempt to compete with low-cost rivals IndiGo and SpiceJet Ltd, Jet airways ran up huge losses and consequent debts. It was once the largest private airline of India.
All of its flights were grounded indefinitely by Jet Airways since April following refusal of granting of more funds to keep the company running by its lenders, led by SBI. The company has defaulted in paying its large dues to its lessors, pilots, fuel suppliers and other parties.
Etihad, along with three other interested parties, had submitted initial bids for investing in the sickened Indian airline last month. Indian wealth fund National Investment and Infrastructure Fund (NIIF), Indigo Partners and the private equity firms TPG Capital were the other bidders.
Speaking to journalists, SBI chairman Rajnish Kumar informed that two unsolicited, non-binding bids for Jet had also been received by the bank. He however also confirmed that currently it had no plans to initiate a bankruptcy process for the airline. “(We’ve) made disproportionate efforts to keep Jet flying,” Kumar said.
Attempts at convincing investors for several months, including Etihad, have been made by Jet to invest in the airline to keep it from closing down. A number of the potential investors however had one common demand that Naresh Goyal, the founder and former chairman of Jet, must leave the organization. The attempts by jet turned out to be futile, forcing the entry and intervention of the lending banks, led by SBI, who proposed a rescue plan first announced in February and acted upon in March following Goyal leaving the company.
“A few unsolicited offers have also been received which the lenders may deliberate upon subsequently,” SBI Capital Markets said in a statement without giving further details.
Success of the sale process is however being questioned by analysts.
“The process of bidding and winning isn’t so easy,” said HDFC Securities analyst Deepak Jasani. “Day by day, losses and loans are rising at Jet, the more the process is delayed the more the situation becomes irreparable,” he said.
Even while the process of bidding for Jet was ongoing, the company was forced to vacate its offices at a number of airports in India and access to some was denied. And according to reports, Jet is now left with just 13 aircraft after it was forced to ground a senior SBI source by its lessors.
(Adapted from IndianExpress.com)