India’s Jet Airways postpones plane sale as losses mount
The Jet Airways (9W, Mumbai Int’l) saga continues with reports that the impending sale of assets, including 11 spare aircraft and engines, has been postponed for 90 days. This follows confirmation late last week that the yet-to-be-relaunched airline had recorded a net loss of INR 3.08 billion rupees (USD 37.8 million) for the three months till as of September 30, and news earlier this week that Liechtenstein police had raided the home and frozen the assets of a prominent investor in the airline.
According to the Economic Times of India, the Kalrock Capital-Murari Lal Jalan consortium attempting to finalize the acquisition of Jet Airways launched a tender in August to acquire five B777-300(ER), three B737-800 and three A330-200s, as well as aircraft engine spares. According to the newspaper, a dozen potential buyers had expressed interest and carried out due diligence. The sale of the planes was approved in resolution orders issued by the National Company Law Appellate Tribunal (NCLAT) in June 2021.
However, a Jet Airways Supervisory Board meeting held on November 11 postponed the sale. The problem appears to be ongoing problems extracting money from the consortium despite numerous promises and court orders to honor certain payments. This includes a dispute over who is responsible for paying the INR 2.75 billion (USD 33.8 million) owed to the Jet Airways employees’ pension fund and a row over who will receive the funds from the proposed lease of three B777s. at AirSerbia.
Meanwhile, the airline’s latest financial report shows that it generated unaudited revenue of just INR 135.2 million (USD 1.66 million) in the three months to September 30, 2022. audited totaled INR 3.22 billion (USD 39.6 million) over the same period.
Pune-based accounting firm Sharp and Tannan Associates were engaged to review the latest unaudited accounts and, in addition to concluding that Jet Airways’ continuing losses are eroding its net worth and that current liabilities exceeded assets to short term at the end of the last quarter, found that several assertions in the accounts, including “the existence, completeness, valuations, cut-offs, etc., with respect to the majority of assets, liabilities and certain income/expenses cannot be concluded due to lack of sufficient appropriate evidence.Furthermore, we were unable to obtain sufficient and appropriate evidence of the adequacy and reasonableness of management’s estimates for various provisions, fair valuation/net realizable value of various assets, etc.”