NEW DELHI: Jet Airways bankers said on Thursday that they have decided, the best way forward for the airline was to get binding bids from potential investors.“The lenders after due deliberations decided that the best way forward for the survival of Jet Airways is to get binding bids from potential investors who have expressed expression of interest (EOI) and have been issued bid documents on April 16,” a statement from the consortium of bankers said.
Analysts said this implies the airline’s future now squarely lies in the potential winner of the bid, the amount of equity infusion that is promised. For lenders, the failure to keep the operations going and the potential drop in valuation for the company would mean higher loan write-offs. The bankers’ statement added that lenders are “reasonably hopeful” that the bidding process would be successful in determining fair value of the airline in a transparent manner.
This comes a day after Jet Airways shut down its operations after a failed attempt to get bankers to infuse emergency funds to keep the airline running. Jet Airways had said in a statement on Wednesday “Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going.”
Bankers involved in the negotiations said they felt that putting more money into Jet would not be able to stave off the inevitable as the airline’s debts to customers, staff, oil supplying companies and aircraft lessors was too large to be met with emergency funds.
They said that though it was known that such a decision would erode the stock value of the airline which they now held in large tranches, the banks felt that sale to an eventual buyer would factor in the price for control of a well-known brand with flying rights within India, an important aviation market as well as international connections that jet flew. “Negotiated prices to a bidder would not be so affected by stock market vagaries,” bankers said.
Rescue fares
Mumbai: Air India on Thursday announced special fares to international passengers of Jet Airways who have been stranded due to the grounding of the airline. The state-owned carrier’s decision came hours after the civil aviation ministry asked airlines to look at whether there can be “rescue fares” for stranded passengers of Jet Airways.