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Jet Airways required fast tracking, back channel talks, out of the box thinking, says Jitendra Bhargava

Updated : June 18, 2019 18:57:28 IST

The State Bank of India, which heads the lenders consortium for Jet Airways has filed an insolvency petition before the National Company Law Tribunal (NCLT). The development comes a day after lenders decided to take the beleaguered airline to bankruptcy courts after all efforts of stitching a revival plan failed.

To understand the road ahead for Jet Airways, CNBC-TV18 spoke to Jitendra Bhargava, former executive director of Air India, and VG Kannan chief executive at Indian Banks' Association.

Bhargava said: "Ever since Naresh Goyal management asked the employees to take a wage cut, deferred salaries and they refused, we knew the position was precarious. The board members also did not pass their accounts for Q1 of last fiscal, so the writing was on the wall, only people were not reading it. Banks, in my opinion, should have acted much earlier. They allowed Naresh Goyal to take his own sweet time to take a call on stepping down when Etihad was making it very clear that they will not be putting in any more money till Goyal steps down, that is the first part.

"The second part is where the banks have to take the blame that when you made Naresh Goyal step down, what was your plan? State Bank of India came on television on that day and made public announcement that we will put in Rs 1,500 crore and the salary arrears of the employee etc would be paid. Now there was no kind of a plan that we are going to put a management team in place, there will be board members appointed and this is the way forward.

"Most of the Rs 1,500 crore would have gone in clearing the salary arrears of the employees, so where was the money for prolonging the [airline's] life? SBI chairman has made public statement that airline business is distinct from a manufacturing unit. Once an airline ceases operations, its tangible value is zero unlike a manufacturing unit where you have physical assets available. So, when they had this realisation why did they allow the airline to shut operations on April 17, 2019?

"Then they follow a purely bureaucratic approach — we will invite bids, give a long time etc, so there was no sense of urgency displayed by them. When you had to ensure that Jet Airways' survival is at stake, what are you putting before you — protection of your Rs 8,500 crore or safeguarding interest of Jet Airways? I do not think we had the sense of priority in public domain that banks were looking at the survival of Jet Airways."

Bhargava added: "This case required fast tracking, back channel talks, out of box thinking. You cannot say I am going to give three weeks' times, then extend the deadline by another few days and then open the envelope and say sorry there are no bids, there are conditional bids available kind of a thing. What has unfortunately happened is Naresh Goyal has been allowed to go scot free so much so that he is today saying I feel sorry for the employees who lost their jobs and employees are in no mood to blame Naresh Goyal, they are blaming the banks.

"So, it is in banks' own interest to come forth with the forensic report which they had ordered on Jet Airways and which they haven't made public. Second, what did they do for all this period? Who is going to take accountability? Now coming to NCLT at such a late stage, what are you going to achieve?"

Kannan said: "Having exhausted what banks felt was a reasonable opportunity, banks felt let us go to the NCLT and through the NCLT process try to get some solution. I am not sure whether NCLT will work out but may be that will be a better way of getting some bidders to come in."

Kannan added: "Open offer, control, even the 49 percent control, airline is not something which can be done by anyone. Very few people are there with management skills to run this and Etihad was the main partner with decent percentage, may be permitting them to take beyond 51 percent without an open offer, there are a combination of factors which will have to be seen.

"Industry itself is not in a great shape always, it has been always affected by fuel prices and so on and so forth. Second thing is it is only the bankers who are asked to take the haircut, why can't other authorities also pitch in saying let us all come together, it is only the bankers which are being asked to bell the cat and not the others."
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