Jet Airways slips into memory as a loved brand after an inept SBI-led consortium forces carrier to crash-land onto bankruptcy court

Exactly two months ago, Jet Airways took the decision to ground their flights after running out of cash. And now, the banks to which it owed over a billion dollars, decided to join in the proceedings of the bankruptcy court  which will allow them to get pennies on the dollars at best. To be honest, the banks have been as clueless about their approach towards Jet Airways as the cash-strapped airline has been since the time they defaulted on the loans. The airline, which was much loved by business travellers and international travellers alike, had the support of its flyers—12 percent of the travelling public, even in its last days. But the banks, once bitten by Kingfisher Airlines and a sucker for process, ensured they did everything “right” and as per process no matter that the airline was choked to death in the process, instead of being given cardiopulmonary resuscitation (CPR). As I’ve argued in an earlier column , banks have had mostly the wrong focus if they wanted to get their loans back. While Naresh Goyal was trying to get another shareholder and thought he was winning by still sitting in the saddle,  the banks pushed him out without stepping in themselves as they claimed they would in March 2019. That was the last nail in the coffin for Jet Airways given that there was no one at the helm of this ship anymore. Remember, the management which worked for a salary and hadn’t been paid for months had no incentive but to try hard. [caption id=“attachment_6477781” align=“alignleft” width=“380”]  Representational image. Reuters.[/caption] The institutions who had an incentive were the banks but were run again by people who worked for a salary. So, SBI came out stating, “no problem, we will soon find a buyer for the airline and get our money back.” And the stance shifted every time something chipped away at the residual value of their loans. For instance, what is an airline apart from the people who fly the planes and make the service? It is a network of slots, and a number of planes to use those slots. As the banks and the aviation ministry were working on cross purposes, the aviation bureaucracy released the slots, eroding the value for shareholders. The SBI and other banks never became shareholders and continued with their faint attempts to recover their money. Till far they haven’t even ponied up the cash to pay for the 777s which they have been counting as collateral and will eventually be taken away by the Exim Bank of the US who will have lien on them since the full payout on these 10-year-old aircraft is still not over. Neither did they bother bringing in any aviation experts who could have worked with the airline on their behalf.

With the airline entering the NCLT, there will be perhaps no recovery of the loans, in which case they could at least have saved the airline by agreeing to the terms of a large haircut a couple of months ago and ensured that 16,000 people did not sit at home after they lost their jobs. Instead, neither did the banks not think creatively nor did they have any skin in the game (read equity), and all they did was to check the boxes to ensure they would not have any issues later in the day.

The only solace the NCLT then offers is the exemption of a public offer for those who decide to buy into the company at this stage. But for an airline which has lost 80 percent of its fleet, the only resource that a new owner would have would be the brand name counterweighed by a significant amount of debt. No wonder then that everyone has kept away from Jet Airways, and if they really had bottomless pockets they could just go about and start their own airline at zero debt from a scratch. (The writer is Mumbai-based business travel and aviation journalist and the founder of the Indian frequent-traveller website Live From A Lounge (www.livefromalounge.com.) He tweets at @LiveFromALounge)