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New investors taking charge at Jet Airways

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November 1st 2020

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London-based Kalrock Capital and multibillionaire businessman, Murari Lal Jalan, have come together to revive India’s Jet Airways almost 18 months after the country’s oldest private airline went into administration. Read More »

On October 17, the committee of creditors of the bankrupt carrier, which has been on the market for more than a year, approved a joint revival bid from Kalrock Capital and Jalan. The offer must now be approved by India’s aviation regulator. It is reported but not confirmed that the carrier group owes US$4 billion to lessors, airports, suppliers and former employees.

Kalrock Capital is a financial advisory and asset management company set up by European entrepreneur, Florian Fritsch. Jalan is Dubai-based with enterprises ranging from paper trading, manufacturing, mining, fast-moving consumer goods, photo imaging and equipment to residential property development, five-star hotels and healthcare.

The new owners have said the resurrected airline will be a full-service carrier that will operate domestic and international networks.

At press time, Jet had about 10 aircraft compared with 112 in its heyday. In particular, each of its 777s requires about US$5 million to US$7 million to return them to running order. It is generally accepted the airline will need at least US$1 billion to be up and running and another US$4 billion to survive COVID-19 and become viable.

India’s aviation industry is sceptical about the plan given the airline’s huge debt and regulatory issues it must overcome. It has lost its slots in Mumbai, Delhi and airports serving its former international network. The India slots have been reallocated to rival carriers and the airline’s staff have scattered in the last 18 months.

The aircraft in its fleet have to be prepared for their return to service, a process estimated to take at least three months. Cockpit and cabin crew have to be recruited or re-employed and salaries owed to the airline’s staff at the time of its entry into administration negotiated.

In a domestic aviation market that has seen demand collapse by 70% for the first nine months of this year, compared with annual average growth of 11% a year for the last decade, aiming to return Jet to profit is a risky business.

The odds of pulling off a revival are long, especially since the investment planned for the carrier falls far short of the true cost of returning the airline to the skies.

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