With Jet Airways finding renewed interest among some new bidders, there is fresh focus on the airline’s assets including its brand value, Air Operator Permit (AOP), a stake in a profitable frequent flyer programme and a few relatively old planes.
The emergence of new bidders has rekindled interest in the residual asset value of the bankrupt airline. According to Nripendra Singh, industry principal, aerospace, defence and security practice at Frost & Sullivan, potential bidders are probably looking at Jet’s international bilateral rights, six old aircraft, ticketing and code share arrangements with other legacy airlines, the Jet Airways brand value as a known full-service carrier, fixed assets which are still not auctioned since bankruptcy procedures never started, and human resources, since not everyone from the airline has been re-employed so far.
Challenges to turn the grounded airline around will include its existing debt obligation, pending dues towards employees, airports, ground handlers and other stakeholders like caterer and fuel suppliers, high costs of restarting operations as maintenance costs to refit grounded aircraft are going to be high, and hiring pilots to operate such aircraft, amid low travel demand due to the covid-19 outbreak, Singh said.
“The loyalty programme of Jet Airways (InterMiles, earlier JetPrivilege) is still functional and has data of passengers. Data (may) look small but it’s of a big value," Singh added.
Jet Airways also had some key slots at busy foreign airports as well as key domestic airports like Delhi and Mumbai, said a senior airline official, requesting anonymity. “However, rights to these slots have expired and other airlines are now using them. It will be a tough fight to get these slots back from the incumbents," the official said.
“The key attractions for potential bidders for the airline will be its AOP and the Jet Airways brand," the official added. Jet Airways also owned a few planes while a large number of aircraft in its fleet were leased and were sent back to lessors after the airline was grounded. “The airline still has in its fleet a few Boeing 777 and Boeing 737 planes," said aviation analyst Ameya Joshi, also the founder of NetworkThoughts.
The turnaround of Jet Airways will, however, not be easy even if a new promoter comes on board as the airline will need a huge amount of cash infusion to start flying again. “The latest decision of the RP (resolution professional) to finalize four potential bidders for Jet Airways seems like a delay tactic. None of the groups shortlisted by the RP has strong aviation experience or are known to be backed by big money," said an industry expert, who didn’t want to be named.
The resolution professional to grounded Jet Airways has finalized four consortia of potential bidders who may submit a bid proposal after due diligence. This is the fourth attempt by the resolution professional to find a suitor to revive the ailing airline. The four consortia include the UK’s Kalrock Capital Partners along with Dubai-based Murari Lal Jalan, Abu Dhabi-based Imperial Capital Investments Llc along with Haryana-based Flight Simulation Technique Centre Pvt. Ltd and Mumbai-based Big Charter Pvt. Ltd, Canada-based entrepreneur Sivakumar Rasiah, and Kolkata’s Alpha Airways. Last week, the potential bidders were given two weeks to review the financial health of the company and firm up their ids. When contacted, Jet Airways resolution professional, Grant Thornton’s Ashish Chhawchharia, didn’t offer comments.
Jet Airways hasn’t flown since 17 April 2019 after it grounded all its operations due to an acute shortage of funds.
Gopika Gopakumar contributed to this story.