India is on the cusp of a general election and the government doesn’t want to be seen to have allowed, what was once the jewel in the crown of Indian aviation, to collapse and die.
Prime Minister Narenda Modi is trying to persuade banks and the country’s National Investment and Infrastructure Fund to take on up to a third of the airlines shares until a new buyer can be found.
Two thirds of the 120 aircraft are now grounded and most staff are in effect working for free, they haven’t been paid in two months.
The question is now, who wants it? If Etihad walk away, which with 24% of the shares would be a shocking blow and effectively value the company at zero, it seems unlikely anyone is going to be too thrilled at handing over what amounts to someone else’s money if its banks, to prop up what is, in effect a bankrupt airline, are persuaded to do so. Right now they don’t seem to want to budge and who can blame them?
If India were to take a major step in the coming months to create a legal bankruptcy framework – with a bankruptcy protection clause – it would at least give some basis to find a way out for future companies and airlines to manage the bad times and protect investors and employees at the same time.
The way things are going it seems almost impossible that JetAirways can come out of this in any way that’s salvageable. In many ways its founder and CEO, Naresh Goyal, who refused to step down until now, and whos pride seems to have kept him from seeing that he was as much a part of the problem, has led it to almost certain extinction.