(Bloomberg) -- Lenders to bankrupt Jet Airways India Ltd. are resisting a court-approved resolution plan, further delaying the former No. 1 private airline’s return to the skies, according to people familiar with the matter and email communications seen by Bloomberg News.
The primary dispute is about whether the new owners of Jet Airways need to pay more money into the pension funds of ex-employees, the people said, asking not to be identified because they’re not authorized to speak publicly about the matter.
Banks, led by State Bank of India, say Jet Airways’ new buyers — Dubai-based businessman Murari Lal Jalan and Florian Fritsch, chairman of London-based Kalrock Capital Management Ltd. — should pay an additional 2.5 billion rupees ($30.1 million) into the retirement kitty, the people said, an ask supported by the email exchanges reviewed by Bloomberg.
The new owners meanwhile have indicated that extra money wasn’t part of the already agreed upon resolution plan and instead must be taken out of the banks’ dues, the people said. All parties are now awaiting fresh guidance from the bankruptcy court due Tuesday, the people said.
A representative for Jet Airways, which also represents the consortium led by Jalan and Fritsch, declined to comment. State Bank of India and Ashish Chhawchharia, the court-appointed professional running the carrier’s insolvency, didn’t immediately respond to messages and phone calls seeking comment.
A revival of Jet Airways, previously majority owned by former billionaire Naresh Goyal, is key to burnish the image of Prime Minister Narendra Modi, who is projecting himself as a market-friendly leader keen to reduce state interference in private enterprise ahead of elections in 2024.
For Jet Airways, a second coming could exemplify how new bankruptcy rules can allow beleaguered carriers to spring back in the South Asian nation, known for its cut-throat aviation market and fare wars that have killed off several high profile players over the years.
Jet Airways collapsed in 2019 under a lot of debt after years as India’s top private airline. It had promised to start flying again in March this year but has struggled to order new aircraft because lenders have been reluctant to take on fresh liabilities. Its new owners also still haven’t reached an agreement about formally taking over the airline, the people familiar with the matter said, limiting the ability of Jalan and Fritsch to infuse more funds and order planes.
The issue of paying more money into the pension funds of former employees came about after a fresh case was filed at the tribunal after the court-approved resolution had been finalized.
The snag also threatens to set back a process of about three years that was to see banks recover about 5% of the some 78.1 billion rupees they were owed.
Bloomberg News reported in late August that Jet Airways was in advanced talks to order about 50 Airbus SE A220 aircraft. The carrier was also in discussions with Boeing Co. and Airbus to potentially place a “sizable” order for the 737 Max or A320neo families of jets. All those discussions are now stuck due to this latest dispute, one of the people said.
Another point of contention is whether ownership should be transfered to the new owners before a court rules on the current pending matters. Banks aren’t willing to let that happen and Jalan and Fritsch aren’t willing to put in any more funds until they know when they’ll actually be in control of the airline, the emails show.
Still another wrinkle centers around a dispute over Jet Airways’ landing and parking slots at airports in India and overseas. Banks want Jalan and Fritsch to confirm the slots but Indian regulators aren’t making that possible until there is more clarity on Jet Airways’ fleet, according to the emails.
To date, Jalan and Fritsch have spent about 7.6 billion rupees in their attempts to get Jet Airways flying again, the emails show.
--With assistance from Ragini Saxena and Preeti Singh.
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