Jet Airways saga: Tatas eye few assets but insolvency cases yet to allow piecemeal bids

Tata Group's interest in Jet Airways may be limited to some of the airline's assets, and the conglomerate may not prefer to bid for the carrier as a whole.

Jet Airways' obligations, including debts of over Rs 8,000 crore to banks, is one main hurdle that may keep the Tata Group from bidding for the whole company.

The Group is said to be keen on Jet Airways' fleet and flying rights. The airline originally had a fleet of 120 aircraft, but around 100 of them have been de-registered. And its flying rights have been distributed to competition, though for a limited period.

Moneycontrol was the first to report about the conglomerate reviving its interest in Jet Airways, months after deciding not to do so.

"The Tatas are not interested to take on anymore liabilities, as both their present investments in the aviation space is yet to make money," said a senior executive from the industry.

At present, the group has two investments in the sector -- Vistara through its joint-venture with Singapore Airlines, and AirAsia India, in which it partners with AirAsia Berhad of Malaysia.

Jet Airways' fleet and flying rights sync with Vistara's international ambitions.

Vistara reported a net loss of Rs 431.30 in FY18. AirAsia India too has been in red. A Hindu BusinessLine report said the carrier suffered a net loss of Rs 308.21 crore in the July-September quarter of FY19 alone.

The Tatas are said to have prepared plans to invest Rs 4,500 crore to expand operations of the two airlines.

But they will need a lot more to bid for Jet Airways, even if the lenders agree to take a steep haircut in their exposure to the airline. The  carrier has been grounded since April 17, when it suspended operations for lack of funds.

Apart for the debts owed to banks, Jet Airways also owes vendors, lessors and salaries to its employees. In total, its financial obligations amount to Rs 25,000 crore.

The lenders have taken the company to the insolvency courts, and the NCLT's next hearing on the case is scheduled for July 5, when the resolution professional is expected to update on the progress.

Along with the Tatas, Qatar Airways is also said to be interested in Jet Airways. Also, Etihad Airways and the Hinduja Group, who were involved in the bidding process, may also submit expression of interest (EoIs).

But as of now, only one suitor has confirmed its interest. And that is the consortium of Jet Airways employees and London-based AdiGro Aviation.

Even as the Tatas explore the possibility of taking part in Jet Airways' insolvency proceedings, it is not clear if the lenders will accept piecemeal sale.

The opinion seems to be divided among lawyers, who specialise in insolvency code.

When asked if it is possible to sell a company's assets individually, a leading lawyer said, " The whole entity needs to be sold in entirety."

But another lawyer added: "In my experience, I have not seen multiple resolution plans in a single CIRP (Corporate Insolvency Resolution Process).  But some argue that there is no restriction."