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Jet Airways: NCLT admits insolvency petition moved by SBI

The National Company Law Tribunal (NCLT) on Thursday admitted the insolvency petition moved by State Bank of India (SBI) — under section 7 of the Insolvency and Bankruptcy Code (IBC) — against Jet Airways, and instructed that the resolution process be wrapped up in 90 days as the matter is of national importance.

Typically, the corporate insolvency resolution process (CIRP) should be completed in 180 days, and an extra 90 days’ time is granted in case the process doesn’t conclude in the stipulated period. The interim resolution professional (RP) has been instructed to submit fortnightly progress reports on the CIRP process, with the first to be filed on July 5, the day of the next hearing.

The tribunal also declared a moratorium on recovery of dues from Jet, the country’s first aviation firm to be admitted for bankruptcy. Jet had over 120 planes, of which only about a dozen have not been de-registered by the civil aviation regulator. The rest of the planes had their leases terminated and many of them have been inducted by other airlines in India or abroad.

Also, on a day which saw the beleaguered airline being admitted under the insolvency process, Jet shares posted their highest single-day gain on the bourses on Thursday, rising 93 per cent on the BSE to end at Rs 64 after declining 75 per cent in the previous 10 sessions. Such a movement in share prices is highly unusual.

Moreover, presiding judges V P Singh and Ravi Kumar Duraisamy did not take cognizance of the Dutch court order that had declared Jet bankrupt, given that cross-border insolvency is still not in place under the IBC and because the jurisdiction of the corporate debtor rests with the tribunal (as the company is listed in India).

SBI, in its plea, said the airline had defaulted on working capital loans of up to Rs 970 crore. Jet had a working capital facility of Rs 505 crore. This account was overdrawn by around Rs 460 crore for 30 days. The lender had also provided a term loan facility of Rs 1,292 crore to the carrier, which owes over Rs 8,000 crore to a consortium of 26 lenders.

jet chart
Jet Airways unusual share movement

Jet stopped operations on April 17 leaving over 14,000 employees in the lurch. SBI had declared Jet an NPA and made provisions in its Q4 results. The other 25 lenders will have to get their claims admitted when the interim RP begins to admit claims of various lenders. On the Jet case, SBI chairman Rajnish Kumar said lenders had taken every decision after a lot of deliberation.

SBI said that Etihad Airways had sought waiver of open offer and assurance of flying slots for take over of Jet Airways, but the lenders to the debt-ridden carrier had no authority to accommodate the relaxations sought.

State Bank of India (SBI) chairman Rajnish Kumar defended the lenders’ decision to take Jet Airways for bankruptcy saying “it was their last effort to find a resolution” for the grounded airline and also did not rule out the possibility of liquidation.

“It (taking Jet to NCLT) is the last effort. This is the first case of bankruptcy in the aviation sector, which will be tested,” he said on the sidelines of the bank’s annual general meeting. Nobody appeared on behalf of the airline as most of the key management personnel had resigned as early as in May, the bank told the tribunal.

Ashish Chhawchharia of Grant Thornton has been chosen as the interim RP by SBI for 30 days, and the final decision on the RP will be taken by the committee of creditors. The interim RP will gather details of the airline’s assets along with along with inviting claims from creditors and employees. The two operational creditors — who had filed separate insolvency pleas — will file their claims with the interim RP now that the SBI plea is admitted.




Sudden spike in Jet Airways stocks, gains 66%

Grounded Jet Airways stocks saw a sudden spike on Thursday as its advanced 66 per cent from its intra-day low to hit a high of Rs 44.70 per share during early trade on the BSE.

At 12.46pm, the Jet Airways stock was trading at Rs 41.75 a share, or at 26.13 per cent higher than its previous close on Wednesday.

“A bounce back was due but since the on ground condition of the airline is dull, the surge in the stock price is unlikely to stay for long,” said Deepak Jasani of HDFC Securities.

The state-run State Bank of India (SBI)-led consortium of lenders to Jet Airways said on Monday that it had decided to “seek resolution under the Insolvency and Bankruptcy Code (IBC) as only a conditional bid was received and requirement of the investor for SEBI exemptions and resolution of all creditors is possible under IBC”.

The company also announced the resignation of two independent directors – Ashok Chawla and Sharad Sharma – on Tuesday, giving another signal that the chances of the airline’s revival were remote.

Besides owing Rs 8,500 crore to public sector banks, the airline has a total liability of about Rs 25,000 crore, which includes dues of operational creditors.

Running out of cash, Jet Airways suspended its entire operations on April 17. The government, subsequently, re-allocated the carrier’s slots and foreign traffic rights to rival carriers.




Growing movement shuns air travel due to high carbon cost




World’s best low-cost airline – AirAsia

 

PARIS, June 18 — AirAsia has bagged the World’s Best Low-Cost Airline for the 11th consecutive year at the Skytrax World Airline Awards 2019.

AirAsia currently operates an unrivalled network of over 140 destinations from 25 hubs in 22 markets.

The low-cost carrier was also named Asia’s Best Low-Cost Airline and the World’s Best Low-Cost Airline Premium Cabin for its Premium Flatbed, available on widebody long-haul AirAsia X aircraft.

AirAsia Group Bhd executive chairman Datuk Kamarudin Meranum said it was an honour to be recognised by Skytrax for 11 years in a row for the airlines’ commitment to providing affordable travel and guest-obsessed service.

“The fact that these awards are based on direct feedback is gratifying and wonderful recognition for the Allstars (AirAsia employees) who put so much effort and commitment into service excellence for our guests,” he said in a statement, distributed during the awards ceremony at the 53rd International Paris Air Show in Le Bourget here Tuesday.

At the ceremony, Skytrax named Qatar Airways as The Airline of The Year.

Meanwhile, AirAsia X chairman Tan Sri Rafidah Aziz said the awards represented nine years of being the world’s best in the category and were dedicated to AirAsia’s Allstars who had been steadfast in upholding the group’s corporate culture, mission and vision.

“We once again continue to be recognised as providing the World’s Best Low-Cost Carrier Premium Cabins on our long-haul flights.

“This year, we will go even one step further by introducing the best of inflight comfort on the new Airbus A330neo, an aircraft which will change the face of long-haul flying as we know it.

“Combined with our renowned inflight service as a long-haul low-cost carrier, AirAsia X will strive to continue to offer excellent value for money to our guests to 30 destinations in 10 markets across the AirAsia Group long-haul network,” she was quoted as saying in the same statement.

Introduced in 1999, the Skytrax World Airline Awards, which is independent and impartial, is regarded as the global benchmark of airline excellence.

It is also known as “the Oscars of the aviation industry”.

This year’s results were decided by a survey of 21.65 million customers of 100 nationalities who reviewed over 300 airlines from September 2018 to May 2019.

To celebrate the winning, AirAsia is extending its latest AirAsia BIG Sale until June 23, 2019.

Its fares start from as low as RM12 from Kuala Lumpur to various domestic destinations and RM89 onwards for international destinations, subject to terms and conditions. — Bernama




Air India sale: Government to prepare a fresh proposal

The Finance Ministry is preparing a fresh proposal for sale of Air India, incorporating issues like crude oil prices and exchange rate volatility, flagged by analysts last year on possible reasons of the government failing to attract bidders for the national carrier.

The ministry’s proposal, to be placed before Air India Specific Alternative Mechanism (AISAM), will also include option of selling either 100 per cent or 76 per cent government stake in Air India.

The AISAM, which is basically a Group of Ministers, have to be reconstituted as Arun Jaitley and Suresh Prabhu are no longer ministers in the new government. They will be replaced by Finance Minister Nirmala Sitharaman and Civil Aviation Minister Hardeep Singh Puri. Transport Minister Nitin Gadkari is likely to continue in the panel when it is reconstituted.

The government last year invited bids to sell 76 per cent stake in Air India, along with transfer of management control. However, it did not attract any bidder. Following that transaction advisor EY prepared a report citing probable reasons that led to failure of the sale process.

The reasons cited include 24 per cent government stake and corresponding rights, high debt, volatile crude oil prices, fluctuations in exchange rate, changes in macro environment, profitability track record of bidders and restriction on bidding by individuals.

During the meeting, which was presided over by the then Finance Minister Jaitley, it was also decided to infuse more funds into the carrier and take steps to lower debt of Air India by selling its subsidiaries and non-core assets.

“We will present a fresh proposal for Air India sale to AISAM. It would include updates on the issues raised when Air India disinvestment failed last year. It would be left to the AISAM to decide whether the government should go in for 100 per cent or 76 per cent stake sale,” an official told .

The government has already asked Air India to finalise its accounts for 2018-19 by June 30.

Once the updated accounts are available and AISAM gives a go-ahead for Air India sale, the Department of Investment and Public Asset Management (DIPAM) and Ministry of Civil Aviation will draft the Preliminary Information Memorandum (PIM) giving details of about the company and stipulating conditions for eligibility of bidders.

In 2018, AISAM had earlier decided to sale 76 per cent in Air India and the buyer was required to take over Rs 24,000 crore debt of the carrier along with over Rs 8,000 crore of liabilities. However, the stake sale failed to attract any bidder when the auction process completed on May 31, 2018. At that time, Air India’s total debt burden stood at Rs 55,000 crore.

As precursor to the strategic disinvestment of Air India, the Cabinet in February approved setting up of a special purpose vehicle (SPV) – Air India Assets Holding Company – to transfer Rs 29,464 crore worth loans of the national carrier and its four subsidiaries.

The official said that the process of transfer of Rs 29,464 crore to the SPV is not yet complete.

“The Department of Economic Affairs, Civil Aviation Ministry and the banks are still working out the modalities of debt transfer. The process is likely to take some time,” the official added. JD CS BAL




Safety and pollution top of the agenda as Paris Airshow opens

(MENAFN – Gulf Times) Aviation executives descended on the Paris Airshow yesterday with pledges to improve transparency over plane safety in the wake of the Boeing 737 MAX crisis and to reduce emissions.

Few blockbuster products or orders are expected at the world’s biggest aerospace show, which brings together nearly 2,500 firms from 49 countries, and 290 official delegations, including government leaders and military chiefs.

With passenger traffic slowing this year, the atmosphere at the fair, where arch-rivals Boeing and Airbus vie for aircraft orders, was markedly less self-congratulatory than in recent years.

President Emmanuel Macron inaugurated the event at Le Bourget airport after flying in on a hulking grey Airbus A330 refuelling tanker operated by the French Air Force.

He then attended the unveiling of a full-size model of the new fighter jet that France and Germany are promoting as a symbol of their efforts to boost European defence autonomy at a time of growing strain in ties with the United States.

The stealth plane is part of the ambitious Future Combat Air System (FCAS) that includes next-generation drones and missiles, which would help reduce the EU’s long reliance on US planes and equipment.

The cooperation framework was later signed by the defence ministers of France, Germany and Spain, so far the only other EU nation to join the project, which aims to have its new plane in operation by 2040. ‘European countries tend to buy American.

We’re offering a European plane for Europeans, independent of American technologies, Dassault Aviation CEO Eric Trappier, whose firm is building the plane alongside Airbus, told CNews television earlier yesterday.

Macron then toured the vast exhibition halls at Le Bourget, where dozens of companies are touting their efforts to make flying cleaner amid criticism of airlines’ carbon emissions.

Airbus officially unveiled its A321 XLR jet, the latest iteration of its hugely popular single-aisle A320, which can now cross the Atlantic thanks to increased fuel efficiency.

That makes it an option for airlines which currently have to use bigger, fuel-hungry twin-aisle planes on longer routes.

The US-based Air Lease Corp has signed a letter of intent to buy 27 of the planes, with deliveries to start in 2023.

Executives at Airbus’s archrival Boeing faced a fresh barrage of questions about its handling of the 737 MAX crisis, following the two deadly crashes since October which together claimed 346 lives.

‘We want to leave no stone unturned in the investigations into an anti-stall system suspected of causing the crashes, Boeing’s head of commercial airplanes Kevin McAllister told journalists yesterday.

Critics accuse Boeing of failing to properly test a system that used just one sensor to determine if the 737 was at risk of stalling, and of failing to adequately inform and train pilots on its use.

McAllister said the update would use two sensors, but it has yet to submit a fix to regulators, who have grounded the plane indefinitely.

‘We are very confident that the three layers of protection we are planning with the software update will prevent anything like this happening again, McAllister said.

He also vowed that any lessons learned from the inquiries into why the new system failed to attract the attention of safety regulators would be applied across Boeing’s civil and defence operations.

‘Our priority is doing everything to get this plane safely returned to service. It is a pivotal moment for all of us, he said.

Boeing has estimated the crisis will cost it $1bn, but the bill is likely to climb the longer the planes stay on the ground.

Boeing now has 140 737 MAXs parked on its tarmac waiting for delivery, and has had to reduce monthly production to 42 planes from 52.

Both Airbus and Boeing have suffered a wave of order cancellations as airlines grapple with slowing passenger traffic growth since the start of this year.

And air cargo shipments, often an indicator of passenger traffic trends, have been slumping so far in 2019, reflecting the trade tensions prompted by US President Donald Trump’s move to impose tariffs on several European and Chinese imports.

If the aviation market continues to soften, Airbus and Boeing could suffer their first disappointing year after more than a decade of solid growth driven in particular by the soaring numbers of people flying in Asia.

The two industry leaders can take comfort from jam-packed order books after hefty revenue growth last year, when their combined deliveries exceeded 1,600 planes.

Analysts say nearly 40,000 planes will be in service by 2038, double the industry’s current fleet.