MUMBAI : A plan by domestic lenders to take control of six aircraft owned by Jet Airways (India) Ltd has run into rough weather after a Dutch court ordered bankruptcy proceedings against the grounded airline last week, two people with direct knowledge of the matter said.

The lenders to Jet Airways, led by State Bank of India (SBI), were in talks to buy out a $30 million loan taken from US Exim Bank for which the six Boeing aircraft were given as collateral, the people cited above said on condition of anonymity.

“The lenders expected to recover at least $200 million of Jet’s unpaid loans by acquiring the aircraft, each roughly valued between $40 million and $60 million and selling them to a third party if Jet fails to revive," said one of the two people cited earlier.

However, in April, cargo handler Worldwide Flight Services approached a court in the Netherlands to seize a Boeing 777 aircraft belonging to Jet Airways hangared at Amsterdam’s Schiphol airport, Jet’s hub for its European operations. Following this, the Dutch court has asked local authorities to seize the aircraft.

Jet Airways has not flown since 18 April due to funding woes. Its international operations were reduced significantly before the airline was eventually grounded.

“The Dutch court ruling has made the refinancing deal of the aircraft problematic since the overall recovery will be much less with a plane missing from the original count of six," said the first person cited earlier.

In 2005, Jet Airways had placed an order for 10 Boeing 777-300ER aircraft that was funded by US Exim Bank. The current list price of a new Boeing 777-300ER is about $375 million.

Queries sent to US Exim Bank, SBI and Jet remained unanswered till press time.

On 27 May, Mint reported that lenders to Jet Airways were expected to take a final decision on the fate of the grounded airline in the next two weeks as they hunt for a new domestic investor, before taking up the last option of a bankruptcy filing.

The report said that while Etihad Airways PJSC was willing to invest just enough to maintain its shareholding of 24% and the National Infrastructure Investment Fund ready to commit only if a new investor entered, the lenders had initiated the search for a third investor to restart Jet Airways’ operations.

If all else fails, Jet may be referred to the National Company Law Tribunal. However, under bankruptcy resolution, lenders may recover only a fraction of the 8,400 crore the airline owes them.


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