At a time when mainline and social media platforms are filled with images, short stories and videos of former and current employees of Jet Airways, we received a WhatsApp message doing the rounds in Mumbai today stitches up an interesting conspiracy theory which one simply can’t ignore!
Orphans of Jet Airways
Nobody Grounded Jet Airways, Nobody Owns Jet Airways & now Nobody owes the Banks. Chamatkar.
Conspiracy, Sabotage & Proxy takeover of Jetairways.
- July 2018: First signs of trouble emerge. Jet had been making average quarterly losses of 800 CR since July 2017, yet we were told that it was because of the changed strategy.
- Aug 2018: engineers & pilot refused to take a 15% salary cut. Pilot Union rejected the CEO demand for a 15% – 20% salary cut. CEO stated that the airline had only 30-60 days of working capital left and may shut down.
- Sept 2018: Salary delay/deferment commenced for engineers, pilots and senior managers.
- Sept-Dec 2018: As per press reports, Jet starts looking for a fresh equity partner – Lulu Group, Tata, Reliance, TPG, amongst others. Reports that Etihad would increase stake to 49% with a corresponding reduction in Mr Goyal holdings with him being capped below 10% with perpetuity clause. All fail as EY kept on changing its stance in the talks.
- 7th Dec 2018: Jet defaults on the payment schedule it had given to Pilots and Engineers .. salary backlog mounts to 3 months.
- 31st Dec 2018: Jet defaults on its loans and is under RBI circular of 12th Feb 2018
- 3rd Jan 2019: The banks draw up a Bank Led Resolution Plan, broad contours defining the role obligations of EY, NG and SBI. This plan was to be completed by 1st March 2019.
- Jan – Mar 2019: Up to 10 iterations in the BLRP even after the acceptance of BLRP by Jet in Board meet of 14th Feb. EY kept on making it more onerous for NG without taking any of the liability or responsibility
- 21st Feb 2019: Jet EGM where critical resolutions were passed including acceptance of the BLRP. EY abstained from voting & subsequently insisted on changes in BLRP
- 25th Feb 2019 The further revised Resolution Plan was accepted & signed by NG.
- Mar 2019: Various options with regards to interim and full funding by EY are proposed by SBI. The draft MOU is exchanged on 8th March 2019.
- 14th Mar 2019: SBI writes to EY CEO Tony Douglas that a decision needs to be made by them on funding or exiting as critical time had been lost by their non-decision this far and Jet has funds to only support 1-2 days of operation
- 15th Mar 2019: In his reply dated 15th March 2019 to SBI, EY CEO Tony considers exiting Jet provided Jet valuation is “struck at the R150 BLRP price” amongst other onerous conditions.
- 16th Mar 2019: EY again changes stand and wants to remain part of BLRP yet does not agree to any terms of BLRP.
- 24th Mar 2019: under pressure from EY, SBI arbitrarily and unilaterally informed NG to step down as Chairman with immediate effect along with AG with onerous and one-sided binding clauses
- 25th Mar 2019: With talks deadlocked and under pressure to save the employment of 22000 Jet employees NG steps down as Chairman of Jetairways.
- 29th Mar 2019: NG signs share pledge agreement and Deed of undertaking
- 2nd Apr 2019: Supreme Court strikes down the 12th February 2018 circular
- 10th Apr 2019: NG executed revised Deed of the undertaking and SBI share pledge agreement which is more onerous on him yet non-binding & discretionary on SBI to release the interim funding. Till 9th April a sum of only 54.5 CR was released against a funding commitment of 1500 CR by SBI.
- 12th Apr 2019: NG writes in a personal capacity to SBI to release funds as it was imminent operations would shut down and would result in job losses for 22000 employees.
- 16th Apr 2019: CEO writes to ask for an immediate and critical infusion of 400 CR from a total of 983 Cr needed till 9th May. Failing this it was warned that Airline will be forced to suspend operations.
- 16th Apr 2019: SBI responds vide letter stating additional funding was not possible and lists various reasons in the letter
- 17th Apr 2019: CEO makes a last compelling effort to SBI for funds, which was not forthcoming. The decision is taking at 4 pm to suspend operations after the last flight of the day. This is communicated via the media at 1700 hrs. The last flight is operated under S2 from Amritsar to Mumbai
Why are the various stakeholders quiet and keeping everything opaque? SBI was leading the BLRP and yet has been quiet without any clarity on what transpired or the way forward. After 8 months of mediation & talks between the Banks (lead by SBI), Etihad and Naresh Goyal no solution crystallized. Meanwhile, 22000 lives were shattered in an instance
Naresh Goyal
- Arranged 250 CR from a group company
- Pledged his complete 51% of Jet shares
- Pledged 49.9% JPPL
- Stepped down as Chairman along with Anita Goyal
- Agreed to one board seat
- Signed a revised more onerous undertaking on 10th April
Etihad
- No fresh capital/equity infusion
- Not pledged 24% holding of Jet
- Did not pledge 50.1% of JPPL
- Insisted on complete removal of Naresh Goyal & family
- Delayed the BLRP with various objections and observations
- Abstained from voting on on acceptance of BLRP during 21st Feb 2019 EGM
SBI
- Did not push for Etihad to stick to their part of the resolution plan
- Did not infuse the 1500 Cr as promised after Naresh Goyal stepped down on 25th March
- Asks for EOI with bid window of only 3 days & later extends by 2 days to total 5 days, (8th April to 12th April)
- Did not release the names of EOI participants
- Did not release a list of eligible bidders, extended binding bid period from 23rd April to 10th May
- Refused the critical 400 CR funding leading to the suspension of operations on 17th April 2019
- Infused less than 100 Cr of the promised 1500 Cr
Status
Flights remain suspended since 17th April 2019. Meanwhile, the Enterprise value is completely eroded, precious slots are being given away at major airports to the competition. More than 60 airplanes from a total of 120 airplanes have been deregistered with a bulk of them going to the competition. Another 30 airplanes will be deregistered in the next two weeks, that’s 70% of the fleet. 220 pilots have exited the company since October 2018 and 200 more have tendered resignation and will leave in the next two weeks, that’s 30% of the pilot workforce.
The competition is benefiting with these slots, planes and ready-made experienced pilots & engineers. The B737 have gone to the competition which has already advertised new sectors using the same planes, slots and pilots by just slapping on a sticker which we saw in the papers today. As per press reports the B777 are also going to be given out shortly and will operate on the same international routes and slots which were originally Jets.
What is unclear is why has SBI not pumped in the money and/EY not put in there share of funds and collaterals. Media reports that this could be a bigger conspiracy to help a particular airline. In a tweet, Mr Subramaniam Swamy has alluded to an even larger conspiracy. Why do EY need more time for due diligence, they have been partners for a long time. It is being talked openly in the corporate office Siroya that the present management has been corralled by EY and has been calling the shots since January 2019. It’s known that in the past EY has had similar outcomes at Air Berlin and Alitalia. They had to exit with complete erosion of their infusion and creating havoc to the aviation ecosystem. EY has been sued for upwards of 2 billion dollars. The complete aviation ecosystem and jobs in these two counties has been destroyed and will take years to rebuild. EY just posted a yearly loss of upwards of 1 billion dollars. Jet which was founded 26 years back. Jet has tendered technical, operational and managerial support to EY when it commenced operations in 2003. Jet, on the other hand, has managed to survive for over 26 years & weathered a lot of ups and downs and has built on capacity, launched international flights, connected remote far-flung regional airports. In spite of predatory pricing, changing regulatory environment and policies, it still had the best inflight product and safety standards, won numerous awards had multiple codeshare partners and was the original Made In India way back in 1993, by providing direct and indirect employment &!support to lakhs of people. So if EY has to take over, they should decide in 48 hours to get on board, or else leave. Importantly the Forensic audit carried out by Ernst & Young on behalf of SBI not found anything amiss at Jetairways only recently.
Why is the EOI not being made public, and why as per the media, individual bids received a change to consortium bid of the 4.
Why are the binding bids not being expedited, the company remains grounded and the enterprise value sharply declining each passing day? In two weeks time, we will have no planes, few pilots and some slots. These 3 are the most precious and time-consuming resources which Jet built over 26 years which will evaporate in 6 weeks. The loyal clientele will surely return only if we have the resources and a possibility to scale up. Ironically Mr Goyal observed the suspension of flight operations from his residence in Mumbai along with 22000 of his extended family. Help he could not even if he wanted to as he remains a lame duck, with EY exercising control in consort with SBI from the 5th-floor office where he once welcomed his extended family of 22000 Employees.
Help Now!
Orphaned Employees
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