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Wednesday, 20 March, 2019, 11 : 00 AM [IST]

Government wants to explore all options to bailout Jet Airways

According to a report by Dheeraj Tiwari and Mihir Mishra In The Economic Time, the government is keen to explore all options for floundering Jet Airways before initiating insolvency proceedings under the insolvency and bankruptcy code (IBC). 

The government has also indicated to the banks that it favours Indian player holding a majority stake in the troubled airline. 

A senior government official confirmed the development but said that banks themselves are not inclined to go to bankruptcy court as it may considerably lower the valuations, forcing them to take a bigger haircut. 

“Besides (air) routes and slots, there are not many tangible assets that may lead to a substantial price discovery if a resolution is sought under the bankruptcy code,” said the above quoted official, adding that an airline going bust also doesn’t augur well for the Indian economy and may also lead to job losses in the short run. 
The National Investment and Infrastructure Fund (NIIF) has agreed to pump in up to INR 1,900 crore. 
“Let banks explore all possible options. Under the inter-creditor agreement (ICA) they have more room for seeking resolutions as compared with the restricted format under IBC,” the above quoted official said, adding that the possibility of promoter Naresh Goyal further diluting his stake to banks will open more space for banks to negotiate with other players. A senior banker said the account continues to be standard with lenders and hence the option of putting it under bankruptcy process is not being looked at. 

Jet Airways is going through its worst-ever financial turmoil and is not able to fund operations leading to cancellations and grounding of flights. 
Etihad has, however, offered to exit the airline, thus, impacting the bailout that included getting an interim funding to stabilise the operations of airline.
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