Hinduja’s plan to board Jet Airways

London-based billionaire Hinduja brothers are close to finalise acquisition plan of beleaguered Jet Airways.

Media reports suggest that Gopichand Hinduja and Ashok Hinduja, will submit an expression of interest by the January 15 deadline, signaling their intent to make a formal offer.

Hindujas’ are seeking a partner to bid.

Creditors are seeking fresh bids for Jet Airways after earlier getting interest from only a single company, Synergy Group Corp.

The Mumbai-based airline, which was once the country’s largest by market value, fell victim to a cut-throat price war initiated by a slew of budget carriers and eventually defaulted to banks, staff and lessors.

State Bank of India and Punjab National Bank have claimed Rs 8,230 crore ($1.2 billion), while other creditors, like employees and lessors, are seeking Rs 6,400 crore from the airline, which is 24% owned by Abu Dhabi’s Etihad Airways PJSC.

There are several contours to the Jet Airways deal which the Hindujas’ will have to understand before making a final proposal.

They will have to grapple with the complexities that have sapped Jet’s value, including lapsed landing rights at Heathrow airport, and the validity of the carrier’s now defunct flying slots.

Most of Jets aircraft’s are de-registered by their vendors hence no inventory here, but unpaid airport charges, employees salary and other statutory payments will reflect in bidding price.

Hinduja Group had earlier this year considered bidding for Jet Airways in partnership with Etihad, but Etihad jettisoned the proposal and Jet Airways was tipped into bankruptcy.

Hindujas’ were open to buy Jet Airways provided that they being indemnified from the airline’s legal liabilities.

A consortium of 26 banks led by the State Bank of India had earlier approached the National Company Law Tribunal to recover dues of more than Rs 8,500 crore. Jet Airways, which had a negative net worth, had accumulated losses of more than Rs 13,000 crore over the past few years.

Net net we believe that this proposed takeover news flow from Hindujas is unlikely to create positivity amongst investors as chances of an early revival look unlikely

Also with competition amongst airlines players like Indigo and Spice increasing its looks difficult for Jet to be economically viable in the near term.

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