Jet Airways revival hits new snag as banks push back on funding

Lenders to bankrupt Jet Airways India Ltd. have pushed back on the court-approved resolution plan, further delaying the return of the former No. 1 private airline to the skies. The primary dispute is about whether the new owners of Jet Airways need to pay more money into the pension funds of ex-employees, according to people familiar with the matter and email communications seen by Bloomberg News. Banks, led by the State Bank of India, have said that the new buyers should pay an additional 2.5 billion rupees ($30.1 million) into the retirement kitty, the people said. However, the new owners have indicated that extra money wasn’t part of the already agreed-upon resolution plan and instead must be taken out of the banks’ dues.

The revival of Jet Airways is key to burnishing the image of Prime Minister Narendra Modi, who is projecting himself as a market-friendly leader keen to reduce state interference in private enterprise ahead of elections in 2024. A second coming of the airline could demonstrate how new bankruptcy rules can allow beleaguered carriers to spring back in the South Asian nation, known for its competitive aviation market and fare wars that have killed off several high-profile players over the years.

The main issue remains unresolved, as all parties are now awaiting fresh guidance from the bankruptcy court due Tuesday. The court-appointed professional running the carrier’s insolvency, Ashish Chhawchharia, and the State Bank of India have yet to comment, as well as the representative for Jet Airways, which also represents the consortium led by Jalan and Fritsch. It remains to be seen how the court will rule and whether the new owners of Jet Airways will be able to come to an agreement with the lenders.