Bankrupt regional airline begins liquidation process

Even after an airline formally files for bankruptcy, there are multiple ways its future can go.

When it is the flagship carrier for a given country, a combination of investors and the government usually step in to save it. That is exactly what happened with beleaguered Air Vanuatu after a sudden shutdown in May 2024 while Copenhagen-based Scandinavian Airlines (more commonly known as SAS) recently emerged from bankruptcy by redividing ownership between several local corporations, Air France-KLM (AFRAF) and the government of Denmark.

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Supreme Court orders liquidation, says there is 'no choice'

Established in 1992, Jet Airways expanded fast and was at one point the second-biggest airline in India, with more than 60 planes and 300 daily flights both within the country and to international destinations such as Hong Kong, France, Canada, and the United Kingdom.

But the financial impact of expanding too fast soon befell the airline, and it filed for bankruptcy in 2019 after struggling to make debt payments and continue operations. During the ensuing five years, the airline was not running flights but remained in a state of limbo as multiple investors eyed a purchase but did not follow through.

Most recently, an alliance of British and United Arab Emirates businesses called Jalan Kalrock Consortium committed to putting 3.50 billion rupees ($41.5 million USD) into the airline and making payments to creditors before the promises ultimately fizzled out. A three-judge bench on India's Supreme Court ruled for liquidation after finding that such a resolution plan was "no longer capable of implementation."

Judges describe the investor back-and-forth as 'peculiar and alarming'

The ruling further calls the fact that investor promises kept being made and then not kept "peculiar and alarming," as well as leaving the court with "no choice but to send Jet Airways into liquidation" to recoup some of the losses to creditors that include several local banks.

"Liquidation must be available to lenders as a last resort since [the] resolution plan is no longer capable of implementation," Justices DY Chandrachud, JB Pardiwala and Manoj Misra wrote in delivering the judgment. The ruling also allows for a plea deal to be made with the creditors.

More on bankruptcy:

Back in August, another Indian airline entered the liquidation process after a court rejected its repeated requests for more time to find buyers to cover debts of over 5.21 billion rupees (roughly $781.14 million USD). Founded in 2005 and operating a fleet of exclusively Airbus A320 (EADSF) planes, Go First was a low-cost carrier running flights between different Indian cities.

Indian low-cost airline SpiceJet founder Ajay Singh and online travel booking platform EaseMyTrip founder Nishant Pitti initially expressed interest in buying Go First but ultimately backtracked due to the airline's high debt load. The airline's financial troubles were exacerbated by the travel shutdown during the COVID-19 pandemic and the recall of the Pratt & Whitney engines that hit it particularly hard as a single-aircraft airline.

The creditor committee representing the defunct airline unanimously voted to instead liquidate it, with one of the bankers saying that "it makes no sense to keep pumping in more money."

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