A Jet Airways plane. (Bhaskar Paul/The India Today Group/Getty Images) 
Snapshot
  • The smoke signals are clearly pointing towards a closure for Jet Airways.

From the midnight of 17-18 April, Jet Airways suspended operations following its failure to find an investor who will sustain it even for a short period. At that time, Swarajya had talked about a 50 per cent chance that it may never fly again. Now, you can move that closer to 90 per cent. Jet is a goner.

One report today (7 May) said that a Shiv Sena union will attempt to disrupt flights at some airports if nothing was done for Jet’s employees. This will not cut any ice with the lenders, and only make things worse for the surviving airlines and their passengers. Jet’s employees will not get back their jobs or back wages. The best they can hope for is some kind of compensatory payment after insolvency proceedings are initiated and the airline liquidated or sold in bits and pieces to bidders.

The smoke signals are clearly pointing towards closure.

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#1: The lenders have invited expressions of interest (EoIs) from potential investors, but till date, there has not been even one serious suitor. Only the National Investment Fund has promised some cash, but it is not an operational investor. The last date for EoIs is 10 May.

#2: The lenders are not willing to even create a small fund to pay employees for fear of setting bad precedents. This is clearly because they see no possibility of reviving the airline, and they don’t want to throw more good money after bad. Of their Rs 8,000 crore dues, they will be lucky if they get Rs 1,000 crore back. When last heard, investors were asking lenders to take an 80 per cent haircut. Now they may demand even more, if at all they bid for Jet.

#3: Jet’s landing and airport slots are already being reallocated to other airlines which are expanding operations. The airline’s foreign routes may also be allocated to rivals. Though these reallocations are said to be “temporary”, if there is no bidder in the next few days, these shifts may well become permanent.

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#4: A Reuters report quoting unnamed Finance Ministry officials said there was little scope to rescue Jet, and it was only a matter of time before someone – not the lenders, but some other creditors – dragged the airline to the bankruptcy court.

#5: The Economic Times quoted a source at one of Jet’s lenders that “we are staring at an obituary”. With the Jet management asking other airlines to take on some of its own jobless employees, the message that Jet will never fly again is getting stronger.

The only people who don’t seem to have got the memo are Jet’s shareholders. At last count, the share was still quoting at Rs 129, valuing the zombie airline at Rs 1,471 crore.

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Hope keeps dumb money invested in Jet.

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