JetAirways expected to be forced into bank lead buyout

JetAirways predicament in India has become so serious that the only way out appears to be a bank consortium-lead buyout.

Having tried to raise money from investment funds around the world and failed, its situation is rapidly deteriorating.

A bank-lead buyout will include a cash infusion, ceding control to bank appointed managers, a huge reduction in future aircraft orders and the sale of assets to raise money.

Provided the deal can be concluded quickly next week JetAirways will likely survive, but if it dithers about accepting the terms, pressure will grow rapidly from lessors wanting their aircraft back and other creditors, all of whom have had their patience sorely tested.

It doesn’t seem long ago that JetAirways was India’s premier airline, standing tall as the best way to travel – a stark contrast with the poor reputation of Air India.

The rapid, indeed frenetic growth of low and mid-cost competition in the form of IndiGo, GOAir and SpiceJet, as well as ME3 penetration of it’s long haul business, has left it like a deer in the headlights of an oncoming car, simply unable to decide how or where to go, or what to do.

The banks are it’s only way out, and they are only becoming involved because they have leant it so much money they don’t want to loose it in a bankruptcy, which in Indian law doesn’t actually have a legal definition, as creditors found out with the collapse of Kingfisher.

The question is how long will it take to recover before the banks can themselves walk away and sell their stake to get their money back.