Can a banker fly an aircraft? Rhetorical as it may sound, the question still demands an answer. More so in the curious case of the loss-making and debt-laden Jet Airways, the latest case of a fairytale story gone awry. In an unprecedented move, a consortium of banks led by the State Bank of India (SBI) has taken over the airlines to manage its day-to-day operations till they find a suitable buyer. Jet has already seen the forced exit of its founder Naresh Goyal, a former ticketing agent who set up the airlines 25 years ago. Industry experts are surprised by SBI바카라s move. 바카라Such a practice has been adopted in the past for smaller companies바카라worth Rs 100 or 200 crore바카라but not for a big company like Jet Airways, whose debt amounts to over Rs 10,000 crore,바카라 says A.K. Ralhan, former chief operating officer of the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).
Out of a total fleet of 119 aircraft, Jet is now operating less than 15 after grounding most planes due to non-payment of dues to lessors. Reports say that the airlines바카라 collapse could put about 14,500 jobs at risk. And that is why even the government is keen on reviving the company. The argument is that since aviation is a consumer industry, solutions have to be out-of-the-box. But then a horde of companies fall under this category. 바카라If that be the case, the power industry, infrastructure, telecom, all serve consumers. So why were they dealt within the legal framework of the Insolvency and Bankruptcy Code? The SBI-Jet Airways case is unique in Indian corporate history,바카라 says Arvind Gupta, a whistle-blower in the ICICI Bank-Videocon case. Another expert who requested anonymity says: 바카라I think that if the SBI decides to run the company without due diligence, valuation and without fixing the mismanagement, it바카라s only giving away good money for bad money.바카라
The question is: how strong is the possibility of SBI bringing the company back on its feet and getting a potential investor? Or is it just a case of throwing good money after bad money? Many have a counter-argument that an airline is worth something only as long as it is operational and flying its aircraft. So, it바카라s a good decision to keep it running by pumping in more money so that the prospects of any future investor remain alive. 바카라Had the airlines collapsed, the debts would have been virtually lost. I think the SBI has taken a good decision as this is the only way to get back the money,바카라 says Jitender Bhargava, a former executive director of Air India.
The bank바카라s ability to assemble a team to run Jet Airways professionally in the interim, and simultaneously look for possible investors, is the pertinent issue. However, finding an investor in the aviation sector is not easy. In 2012, Vijay Mallya바카라s Kingfisher Airlines couldn바카라t get a buyer despite all efforts. It went bankrupt. Even Air India put its best foot forward to get an investor but failed. The founder chairman of Jet Airways too tried his best to scout for a buyer, but he couldn바카라t succeed. However, some people familiar with the aviation industry are of the view that the chances of getting a buyer in case of Jet in the current scenario are quite strong. 바카라In the case of Air India, the government was not willing to give away the management control. That바카라s why they didn바카라t get any buyer,바카라 says a senior Air India officer.
With the Jet experiment, is it viable to look for a similar exercise in other sectors such as real estate, infrastructure and manufacturing? Venket Rao, an expert of management and regulatory compliances, says that if such an experiment is possible in the aviation sector, it can be done in other sectors too. He says that in the aviation sector, a company바카라s main assets are the aircraft. So, those can be liquidated into cash and banks will get flying slots, parking slots, air routes and some offices of the company. 바카라Compared to that, a manufacturing company is worthy of an experiment like Jet Airways as it has far more tangible assets than any other aviation company,바카라 says Rao.
