Jet Airways crisis signals another big scam after 20,000 employees suffer as govt plays games
Jet Airways suspended its operations from 17 April 2019 and the 20,000 employees who have been left in the lurch are puzzled at something murky going on in high places
Subramanian Swamy, the self-appointed conscience-keeper of the RSS who simultaneously maintains very powerful American connections and corporate links, has a remarkable knack for dropping unexpected bombshells at the right moments.
He exploded one on 21 April 2019 in the context of the ongoing Jet Airways crisis when he tweeted: “Government better be careful: Two Ministers are manipulating sale of Jet Airways spoils to SpiceJet whose real owners I will reveal later. Only above-board option GoI has is amalgam of Jet with Air India since Bilaterals on airspace involves Govt”. It is well-known in media circles that Swamy was referring to the takeover attempt of the SpiceJet man Ajay Singh who coined the slogan Abki baar Modi Sarkar in 2014!
It is no secret either that this Ajay Singh is close to the powers that be in Modi Government. That was the reason why perhaps Modi Government reportedly arms-twisted Kalanithi Maran to return the controlling stakes in SpiceJet to Ajay Singh in 2015 after Maran brothers acquired the majority stakes in the airlines in 2010 and infused money to spruce it up and made it viable.
This happened in the backdrop of Modi Government reviving 2G cases against Marans and an old case of illegal telephone exchange at their residence.
Let us hope that true to his word Mr Swamy would reveal which “real owners” Ajay Singh is fronting for. No matter whether Ajay Singh represented Mukesh Ambani or some top BJP leaders or both simultaneously, he seems to be having a long arm in corporate battles for business grabs. Now Subramanian Swamy is hinting at him as the villain of the piece in the unfolding Jet Airways takeover drama.
Let us come to the Jet Airways crisis proper. Jet Airways suspended its operations from 17 April 2019 and the 20,000 employees who have been left in the lurch are puzzled at something murky going on in high places. They are not able to make up their mind as to who betrayed them more—whether former chairman Naresh Goyal or the SBI-led consortium of lenders who have taken control of its new management.
Due to mismanagement under Naresh Goyal, the accumulated loss of Jet Airways reached ₹13,000 crore and it couldn’t operate the flights as it had no fuel supply as oil companies refused to supply fuel unless the accumulated dues were cleared. Jet Airways, which was once the second biggest airline after Air India and the biggest among private airlines and which was operating 600 flights daily with 120 aircrafts is now left with only 14 aircrafts and operating just 7 of them.
This is because the lessors have taken back their aircrafts as dues are not being cleared. 50 of these leased aircrafts have already been grabbed from the international lessors by SpiceJet. Further, the Jet Airways owed $1 billion to lenders for which they were not able to pay interest even as revenues had dwindled. Citing this crisis as the pretext, the SBI-led consortium of lenders ousted Naresh Goyal as chairman in March 2019 and took over control of the management of Jet Airways.
This new management under the control of the same lenders requested them to infuse a fresh fund of ₹1500 crore to pay for fuel and meet the payment of salaries and keep the airlines going. The consortium of lenders initially intended to infuse this much fund but they dragged their feet after a meeting on 15 April 2019. In other words, they have backtracked from putting their money into the airlines now under their own control and whose revival is their own responsibility.
Mr Jaitley explained that the public sector banks (PSBs) took this decision “in legitimate self-interest and in the interest of public depositors in the banks”. Have the PSBs which squandered away tens of thousands of crores of public money to Nirav Modis and Anil Ambanis suddenly turned holier and wiser over ₹1500 interim loan to Jet Airways? Or, was it a delaying tactic to meet some other objective? How many other companies of wilful defaulters they have taken control of and what are the norms for taking over such direct controls? Why Jet Airways is a special case? Could Jailey kindly explain?
On 21 April 2019, Congress leader Anand Sharma stated that the Jet Airways takeover farce reeked of a big scam. He alleged that the airlines was deregistered and then re-registered again to bring down its value to enable some takeover tycoon to grab it cheaper and in the process hurting the interests of lakhs of small shareholders.
Shareholders owning shares valued at less than ₹1 lakh accounted for 11.42% of the stakes in Jet Airways and they were being taken for a neat ride. Sharma urged the Supreme Court to take over the case and called for a court-monitored investigation into this huge scam.
Even if the PSB lenders wanted to remove the incumbent management of Naresh Goyal and auction off Jet Airways to new bidders, why this is not being done through NCLT, the semi-judicial body, and under the IBC framework as per law? Why government is violating its own policy on effecting such transfers of corporate controls and the procedure for debt recast?
Four bidders—private equity firm PG Capital, the American investment company Indigo Partners, the government-owned National Investment and Infrastructure Fund Ltd (NIIF), and the Arab-controlled Etihad Airways—have so far submitted bids besides founder promoter Naresh Goyal.
They had offered to infuse funds to revive the airlines in return for acquiring controlling stakes. It is true that SpiceJet is not figuring among them but Subramanian Swamy is not the kind of person who would engage in loose talks without evidence. Is the government waiting for SpiceJet to submit its “lowest bid”?
Among the bidders, the consortium of lenders had already blocked Naresh Goyal by putting a condition that he could submit a bid only as a minority investor in league with other investors and could not get controlling stakes again for himself. Nevertheless, he had reportedly not adhered to this condition in his expression of interest (EoI) and perhaps planning to challenge it in the court.
More perplexing for the employees is the inexplicable decision of the government at this stage in the revival process to give away as many as 440 lucrative flight slots of Jet Airways at the Delhi and Mumbai airports to rival airlines including SpiceJet. So, the bidders are reportedly having second thoughts already.
Is this a devious attempt by the government to drive away other potential investors in favour of some “chosen one”? As it is, Spicejet would be a major gainer from the Jet Airways crisis as it has the second biggest market share after IndiGo.
Corporate takeovers might be a dog-eat-dog business but in the process, they are also biting the workers. Jet Airways CEO Vinay Dube let the cat out of the bag when he said that it might not be possible for the new management to absorb all the employees.
When the Minister of State for Civil Aviation Mr. Jayant Sinha casually commented that only capable employees of Jet Airways would be absorbed by other airlines, the All India Jet Airways Technicians Association (AIJATA) wrote to him saying, "We will not let this company go down and will not tolerate this casual talk to dismantle this company piece by piece and give it as doles to airlines of your choice."
Representatives of pilots, engineers, cabin crew and ground staff unions met Finance Minister Mr Arun Jaitley along with Jet Airways officials and requested him for government assistance for at least one month salary until a new management takes over but Jaitley showed no sympathy. Not only an interim funding of ₹1500 crore, the banks refused to offer even ₹400 crore as payment of salaries would cost only ₹170 crore per month. In a laudable gesture of solidarity, the bank employee’s union AIBEA urged the banks to give needed funds to the Jet Airways to clear the salaries.
The Jet Airways unions—AIJATA and National Aviators’ Guild (NAG), the association of pilots—were resorting to desperate moves—appealing to the President of India, requesting the government to take over the airlines, protesting alternately at the Delhi Airport and Jantar Mantar and calling for a ‘no pay no work’ strike only to call it off the very next day.
One NAG office-bearer in Chennai said they even considered putting forth a rescue plan of taking over Jet Airways themselves and running it as a workers-owned enterprise. Their helplessness to some extent reflected the cluelessness of the trade union movement as a whole in tackling such manipulative takeovers.
An unsuspecting AITUC, unaware of the machinations of hostile corporates in the takeover game and the unprincipled backing to them by the political and governmental leadership in their own vested interest, called upon the government to “suitably absorb Jet Airways in government jobs”!
Individual cases of hostile takeover bids and dubious revival efforts like Jet Airways case drive home the need for the entire organised trade union movement to prevail upon the government to establish protocols to safeguard workers interests in such cases. Just as the mandatory depreciation fund that protects the shareholders’ interests, setting up of a fund to meet emergency needs of workers during such occasions should be made mandatory.