Can a banker fly an aircraft? Rhetorical as it may sound, the question still demands an answer. More so in the curious case of the loss-making and debt-laden Jet Airways, the latest case of a fairytale story gone awry. In an unprecedented move, a consortium of banks led by the State Bank of India (SBI) has taken over the airlines to manage its day-to-day operations till they find a suitable buyer. Jet has already seen the forced exit of its founder Naresh Goyal, a former ticketing agent who set up the airlines 25 years ago. Industry experts are surprised by SBI’s move. “Such a practice has been adopted in the past for smaller companies—worth Rs 100 or 200 crore—but not for a big company like Jet Airways, whose debt amounts to over Rs 10,000 crore,” says A.K. Ralhan, former chief operating officer of the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).
Out of a total fleet of 119 aircraft, Jet is now operating less than 15 after grounding most planes due to non-payment of dues to lessors. Reports say that the airlines’ collapse could put about 14,500 jobs at risk. And that is why even the government is keen on reviving the company. The argument is that since aviation is a consumer industry, solutions have to be out-of-the-box. But then a horde of companies fall under this category. “If that be the case, the power industry, infrastructure, telecom, all serve consumers. So why were they dealt within the legal framework of the Insolvency and Bankruptcy Code? The SBI-Jet Airways case is unique in Indian corporate history,” says Arvind Gupta, a whistle-blower in the ICICI Bank-Videocon case. Another expert who requested anonymity says: “I think that if the SBI decides to run the company without due diligence, valuation and without fixing the mismanagement, it’s only giving away good money for bad money.”