India sees little scope for Jet Airways revival -government sources (updated)

Videocon Industries (India)

05/05/2019 12:42

* Officials advise banks to wait for new government on
default
    * Jet bank loans smaller than other defaults
    * New government likely to take charge by end of May

 (Adds detail)
    By Manoj Kumar
    NEW DELHI, May 5 (Reuters) - India's government sees little
hope of a bidder emerging for debt-laden Jet Airways Ltd
 JET.NS , two senior finance ministry officials said, even as
thousands of employees plead with the government for a rescue.
    Parties that had initially expressed interest in Jet, which
is saddled with roughly $1.2 billion of debt, have so far failed
to make firm bids to bail it out, increasing the odds that it
could soon face bankruptcy proceedings.  urn:newsml:reuters.com:*:nL3N22E0MP
    "There is little scope in the revival of Jet," said one
official, adding that if a bidder emerged, the government was
still willing to return slots to the private airline which have
temporarily been given to rivals.
    A second senior finance ministry official said it was only a
matter of time before someone dragged Jet to the National
Company Law Tribunal - India's bankruptcy court - for recovery
of dues from Jet.
    It will most likely be one of Jet's creditors and not its
lenders that do so, said both the officials who spoke on
condition of anonymity.
    Unions have been pleading with the government to ensure the
airline is rescued. Last week, in a letter to the prime minister
seen by Reuters, its pilots union urged the government to
intervene and speed up the bid process for the airline and stop
the deregistration of its aircraft by its lessors.
    Jet had a fleet of more than 120 aircraft but more than half
have been deregistered and repossessed by lessors. 
    India's aviation authorities have also been temporarily
farming out Jet's slots to rival carriers as airfares have
soared in the wake of Jet's shutdown.
    Rival low-cost carriers have also been scooping up aircraft
that were formerly operated by Jet from its lessors, and
poaching hundreds of its pilots, cabin crew and other staffers.
    The airline halted operations on April 17 after its lenders
refused to provide further funds to keep it afloat.
    Once India's largest private carrier, it had more than
16,000 employees and flights to dozens of international
destinations.
    State Bank of India (SBI)  SBI.NS  said last month that it
expected bidders to submit binding bids by April 30, and to
complete the sale process this month. However, bankers involved
in the process told Reuters last week that no binding bids had
emerged.  urn:newsml:reuters.com:*:nL3N22E0MP
    "The banks have been advised to wait for the formation of
the next government ... before taking any decision on Jet's
fate," the official told Reuters.
    Prime Minister Narendra Modi is currently seeking
re-election. His government has come under fire from critics and
opposition parties for rising unemployment.
    Despite this, senior government officials have opposed any
bailout package for the airline arguing it would increase
pressure to support other failed private companies.
    The government is satisfied with the handling of the Jet
crisis by banks and other institutions as it has thus far not
become a major election issue, the second ministry official
said.
    Jet's borrowings are small compared to those of other big
defaulters such as Videocon  VEDI.NS  and some steel companies,
so lenders likely can wait for some more time before commencing
bankruptcy proceedings, the official said.
    An official at ICICI Bank  ICBK.NS , which has to recover
over 5.4 billion rupees ($78.17 million) from Jet, said the bank
sees little chance of any recovery without the government coming
up with a rescue plan. 
    "We largely think our money in Jet is gone," he said.
    ($1 = 69.0790 Indian rupees)



 (Additional reporting by Aftab Ahmed in NEW DELHI; Editing by
Euan Rocha and John Stonestreet)
 ((manoj.kumar@thomsonreuters.com; +91 11 4954 8029; Reuters
Messaging: manoj.kumar.thomsonreuters.com@reuters.net))