While expression of interest from two suitors is encouraging, many questions still remain.
The good news. Jet Airways has got an expression of interest (EoI) from two suitors - South America’s Synergy Group and New Delhi-based Prudent ARC Ltd.
The bad news? Many of the questions around the revival of the airline still remain.
While Synergy submitted its interest on January 6, little-known Prudent ARC put in the EoI on January 15, the deadline.
The interest would come as a relief for Jet Airways lenders, who are hoping to recover more than Rs 8,000 crore in dues. The airline’s total liability is over Rs 20,000 crore. The airline suspended operations in April.
The two suitors will now go through the eligibility test. If they clear the hurdle, they will need to submit bids by February 17.
For Synergy, which emerged as the sole suitor for Jet Airways in September, this would be familiar territory. In 2019, too, the group submitted its EoI but failed to submit a bid despite several extensions in deadlines.
Importantly, many of the questions around its interest remain.
It still has not got an Indian partner, which is necessary to qualify as a bidder. Indian regulations allow foreign companies only 49 percent stake in airlines, and the operational control also remains with the local partner. Despite reaching out to many companies, Synergy is yet to get a partner.
The group also asked for clarity on Jet Airways’ slots and flying rights, which had been distributed among the likes of IndiGo, SpiceJet and Vistara. While industry regulator DGCA has said it will “positively consider” requests, it is subject to “concrete business plans.”
On that front, Synergy, with its own financial woes, is yet to show its cards.
While an interest from a new suitor is always welcome to bring fresh interest in a bidding process, little is known about Prudent ARC.
The relatively-new company got approvals to start business only in 2016. It is not known to have expertise in aviation. Reports add that the company may not clear the eligibility test as it does not have a net worth of Rs 2,000 crore.
It may be a different story if Prudent manages to get a partner, a financial investor, on board and forms a consortium. That is something that Synergy has been trying to do.
The chances look slim, especially with the Hinduja Group, which seemed to have rekindled its interest in Jet Airways, backing out and not submitting an EoI.Now the ugly bit. For Jet Airways lenders, liquidation is the only other road to take. But, they have shown reluctance in taking that turn, more willing to extend bid submission deadline. Now, too, the February 17 deadline may not be sacrosanct.
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