After turbulence in two homegrown airlines in the recent past, stakeholders of both the firms are now looking forward to solving the issues. While debt-laden Jet Airways will invite bids to revive operations, the country’s largest airline IndiGo, after posting a stellar 43-times jump in profits in the first quarter of FY2019-20, has begun to work on matters raised during promoters’ spat.
The resolution professional (RP) of Jet had called for Expressions of Interest (EoI) on Saturday to sell the grounded airline’s assets by August 3. The RP, in an advertisement, has set August 14 as deadline to come up with the final list of resolution applicants. The resolution plans will have to be submitted by September 5. The RP is estimated to submit the resolution plan to National Company Law Tribunal (NCLT) for approval on September 20.
While it is not yet known who all are keen to buy stakes in Jet, which in its heydays dominated the country’s aviation market, it is known what all liabilities are attached to it. Its total liability accumulates to around Rs 36,000 crore, including more than Rs 10,000 crore of vendor dues, Rs 8,500 crore along with interest owed to lenders, over Rs 3,000 crore in salaries and more than Rs 13,500 crore in accumulated losses of the past three years.
Due to its huge liability and other factors, the airline, which hasn’t flown since April 18, was unable to attract investors after lenders failed to reach a resolution plan despite various attempts. On the assets side, Jet Airways has 14 aircraft including 10 Boeing planes, 49 per cent stake in Jet Privilege and a few real estate properties.
Meanwhile, InterGlobe Enterprises (IGE), which runs IndiGo, said it would seek shareholders’ approval for induction of an independent woman director on the Board. It was one of the several demands made by IndiGo’s co-founder Rakesh Gangwal in his letter to markets regulator Sebi.
IndiGo, which controls nearly half of the Indian domestic market and is expanding aggressively, said it is in the process of replying to Sebi and the ministry of corporate affairs on the grievances raised by Gangwal. While it is not known whether Gangwal and co-founder Rahul Bhatia would find a common ground to work together peacefully, analysts have pointed out that if the dispute is not settled quickly, it may dent investor confidence and impact decision-making.
Gangwal had earlier raised concerns over corporate governance lapses and related party transactions by IGE. Bhatia has denied the allegations, saying he played a significant role in taking massive financial risks as well as nurturing the airline in its early days.
Amidst the bitter spat that impacted the company’s stock prices, the airline on Friday
reported a jump in its Q1 profit to Rs 1,200 crore in FY20 from
Rs 28 crore a year ago, while its revenue rose 45 per cent to Rs 9,420 crore.