Regular flyers and employees of India’s oldest private airline, Jet Airways, are now stepping in to rescue the temporarily grounded carrier.
A group of frequent flyers of Jet has approached the airline’s key lenders—including the State Bank of India (SBI) and ICICI Bank—with a buyout plan, the news agency IANS reported on May 05. The plan also involves the carrier’s staff, who have already expressed their willingness to buy out the lenders’ stake in Jet, similar to how United Airlines was taken over by its employees in the US in 1994.
The group of frequent flyers comprises members of JetPrivilege, the airline’s loyalty programme, which rewards customers with JPMiles, or points that can be redeemed while booking flights or hotels. The programme is managed by Jet Privilege Private Limited, an independent entity under the Abu Dhabi-based airline Etihad—a minority shareholder in Jet.
Called the Revival of Jet Airways Plan (ROJA), the group has proposed a two-stage leveraged buyout. In the first stage, the employees will become part-owners and take control of Jet, with the help of loans provided by the airline’s existing lenders.
“The banks can give a Rs1,500 crore ($216 million) loan to the employees. This is six months’ salary of each employee as personal loan. The employees will use this money to buy out 51% stake in the company from SBI and 12.5% from Etihad. This way the employees will control Jet Airways,” read the presentation, according to IANS.
In the second stage of the plan, the frequent flyers will infuse money indirectly.
Having taken control, the employees would pursue banks to give a personal loan to those who want to buy four tickets for Rs10,000 each, which would be valid for two years. By pre-selling these tickets, as much as Rs8,000 crore can be raised, according to the presentation.
The latest proposal comes even as lenders have invited bids from potential investors. The first round of bidding for Jet will conclude on May 10.
“We are working on every possible way to save the airline, and as a result, with the help of financial experts we have come up with a plan, however, there isn’t any positive response from the bidders till now. We are looking forward to May 10 and only after that it would be clear where the airline stands,” Nikunj Agarwal, a pilot with Jet Airways for eight years, told Quartz.