Lenders to Jet Airways (India) Ltd are unlikely to consider an initial bid from Naresh Goyal, the airline’s ousted founder, to regain control of the debt-laden carrier, two people directly familiar with the bidding process said.
Goyal was allowed to submit an expression of interest (EoI) on the condition that he bid as part of a consortium with other investors where he would hold a minority stake, the people cited above said, requesting anonymity. Those conditions have not been met in his bid submitted on Friday. A final decision on the bid would be conveyed to Goyal after considering legal opinion, they said.
In March, Goyal was forced to cede control of the airline he had founded more than two decades ago, after Jet Airways, saddled with over $1 billion in debt, defaulted on payments to banks and aircraft lessors. Jet Airways’ fleet has now dwindled to 14, a fraction of the 119 aircraft it flew before its first default on 31 December. The airline has stopped international flights till Monday afternoon and significantly curtailed its domestic operations.
Creditors to Jet Airways had extended by two days a deadline for potential buyers to bid for as much as 75% of the carrier to Friday evening.
At least four bidders are likely to be shortlisted by early this week, according to the two people cited before. Current shareholder Abu Dhabi-based Etihad Airways PJSC and two other international airlines are among companies that had submitted initial bids, they said.
Mint reported on 11 April that India’s quasi-sovereign wealth fund National Investment and Infrastructure Fund Ltd, Etihad Airways and two other financial investors had shown interest.
“The majority view is that Naresh Goyal is ineligible to bid, but lenders are seeking legal opinion before declaring the names of the qualified bidders," said one of the people cited earlier.
Strategic bidders looking to invest in Jet Airways should have a minimum net worth of ₹1,000 crore or at least three years of experience in the aviation sector. For financial investors, the qualifying conditions are minimum assets under management of ₹2,000 crore or at least ₹1,000 crore in committed funds for investment in Indian firms or assets, according to the EoI document that was made available to prospective bidders and reviewed by Mint.
“Once the qualified bidders are finalized, they will be given access to Jet Airways’ data room," said the second person. “The final bids are expected to come by 9 May, though the date may change depending on how the process goes."
“Since, this is an open bidding (to the public), I am not sure if SBI (State Bank of India) can disallow Naresh Goyal from bidding," said Mark Martin, chief executive of aviation consultancy firm Martin Consulting. “As to why he wants to bid for Jet Airways, we all know that he’s still very emotionally attached to the airline he founded over two and half decades ago."
Goyal was not available for comment on the landline number listed in his latest address to Jet Airways staff. Emails sent to his official Jet Airways account bounced back.
Mint was the first to report on 3 August that Jet Airways was facing several challenges, including a surge in fuel prices, weaker rupee and intensifying competition, and had approached investment bankers to help sell a stake in the carrier.
The planned stake sale did not materialize and in March the lenders led by SBI agreed to take a 50.5% stake in Jet Airways and make a cash infusion of about ₹1,500 crore to tackle urgent issues faced by the carrier such as delay in payments to employees, lessors and others. However, lenders have been releasing funds only in small amounts, which Jet Airways has found insufficient for running its operations.
Mint reported on 13 April that Jet Airways’ executives will meet lenders on Monday with a fresh demand for interim funding.
In a related development, pilots of Jet Airways have threatened to take legal action against the management if salaries pending for the last three months were not paid by Sunday.
Civil aviation minister Suresh Prabhu tweeted on Friday that his ministry would “review issues related to Jet" and “take steps to minimize passenger inconvenience and ensure their safety".