Following a standoff between the Jalan-Kalrock Consortium (JKC) and the airline’s lenders over pending gratuity and provident fund (PF) payments, Jet Airways’ revised plan to return to the skies in November is in jeopardy. This will be the consortium’s third missed deadline in the last six months because the company has not been handed over to them by the creditors.
“JKC has been pursuing with the lenders since May 21, 2022, through multiple written communications to initiate the process that enables JKC’s fund infusion in Jet Airways and implement the plan. As the handover of the company from the lenders is still awaited, the revised payment timelines are yet to be determined,” a JKC spokesperson said.
On Friday, amid reports that Jet had placed 60% of its employees on unpaid leave, CEO Sanjeev Kapoor tweeted, ‘it was 100% false information.’ In another tweet, he stated that two-thirds of the workforce has been unaffected, and the remaining one-third will be on temporary pay cuts. “Only a small portion of the total (~10%) will be on temp LWP (leave without pay),” he added.
According to sources close to the situation, only mid- to senior-level employees are being placed on unpaid leave for the next two months. “They will remain employees of the company and some of them are being affected by only reduced pay to the tune of 25%-50%,” a source said.
The CEO has also taken a pay cut. However, the cabin crew and pilots are not impacted at all and they continue to be paid in full.
While the National Company Law Appellate Tribunal (NCLAT) ordered JKC to pay employee dues totaling around Rs 275 crore in October 2022, the consortium has refused to pay, citing the resolution plan that has already been approved by the lenders, the National Company Law Tribunal (NCLT), and the NCLAT.
“JKC has already approached the NCLT to give directions to the lenders to allow it to implement the resolution plan,” an industry source said, referring to the November 15 hearing. JKC’s resolution plan was approved by the NCLT’s Mumbai bench in June of last year.
“Lenders have not yet provided bank account details for fund infusion, despite multiple requests by JKC to provide it. Nor have they initiated other formalities such as making the company active in ROC/SEBI formalities, etc which must be done by the lenders in order for JKC to infuse funds,” the source said. State Bank of India leads Jet’s lenders (SBI).
The lenders, for their part, appear hesitant because they have already taken a 95% cut on the deal.
“JKC has already deposited Rs 150 crore with the lenders. There is no delay from the consortium to implement the resolution plan, and we confirm that the JKC is in full compliance of the approved plan, and it remains deeply committed to the relaunch of Jet Airways and to recapture the lost glory,” the spokesperson added.
The consortium proposed a fund infusion of Rs 1,375 crore, including Rs 900 crore for capital expenditure and working capital, according to the plan submitted by JKC. It also included Rs 475 crore for the settlement of all creditors’ claims. Both banks and JKC have declined to shoulder the additional liability of PF and gratuity payments.
“As per the approved resolution plan, JKC has committed to pay employees and workmen of Jet Airways, a sum of Rs 52 crore or their minimum liquidation value, whichever is higher, towards settlement of all their claims against Jet Airways, subject to a maximum of Rs 475 crore. Therefore, JKC’s total liability towards the erstwhile creditors of Jet Airways is capped at Rs 475 crore,” said a JKC spokesperson added.