Jalan Kalrock Committee Seeks Extension to Make Payments to CoC of Jet Airways

The Jalan Kalrock Committee has sought an extension to make payments to the Committee of Creditors of bankrupt airline Jet Airways. The National Company Law Appellate Tribunal (NCLAT) has asked the JKC to file an application stating the conditions for seeking an extension to make the payments. The committee has said that it will deposit INR 100 crore by August 31, and INR 100 crore by September 30 and the CoC can encash bank guarantee of INR 150 crore immediately.

The CoC had earlier said that it may not pursue its filed appeal with the NCLAT if the consortium paid the INR 350 crore due. “Once they deposit INR 350 crore, we may not be inclined to go ahead with the appeal,” the counsel informed the appellate tribunal, stating that "we also want the plan to work."

Matter with Creditors

The application filed by the State Bank of India, the primary lender, and others pertain to the transfer of ownership of the airline to JKC, the winning bidder for Jet Airways. The NCLAT on Friday, August 18 sought to know the conditions for JKC filing an extension appeal. Cash-strapped Jet Airways stopped flying on April 17, 2019.

On the other side, additional solicitor general N Venkatraman, representing the lenders, including State Bank of India (SBI), countered that the infusion of INR 350 crore is merely the first step towards payment of dues. He added that after this initial payment, three more tranches of money are to be paid to the lenders, with the final step being the transfer of equity shares.

Challenging JKC’s argument, Venkatraman stated that the bank guarantee of INR 150 crore cannot be considered a part of the INR 350 crore payment, as it was executed for a different segment of the resolution plan. On May 26, the NCLAT granted JKC 107 days to pay the lenders’ share. “The SRA (successful resolution applicant) is ready and willing to infuse the first tranche of INR 175 crore, and to demonstrate the bonafide of the SRA, it shall infuse INR 50 crore within 30 days and the rest within the allowed time,” noted the order. The court directed that, until this time (107 days, until August 30), the bank guarantee of INR 150 crore should not be invoked by SBI.

JKC was earlier allocated 180 days, from November 16, 2022, to May 15, 2023, to pay the dues to the lenders. The court observed, “After considering the facts and sequence of events in the present case, we are of the view that the SRA is entitled to exclusion of the period from November 16, 2022, till March 3, 2023, when this tribunal in the present appeal passed an order declining the interim relief as prayed by the lenders.”

This means that JKC has obtained an extension of over three months to deposit dues to the lenders since 107 days were excluded from the period of 180 days. NCLAT issued the order on JKC’s application to prevent SBI from invoking the guarantee. The public sector lender had told the tribunal in an earlier hearing that JKC had not paid dues that were due on May 15. JKC informed the court that on May 13, it received a letter from SBI, requesting the infusion of amounts referred to in the letter. SBI's letter further detailed the identified bank account and warned that if the payment obligations were not met by May 15, lenders might exercise their rights and remedies under the law, including the invocation of the performance bank guarantee.

The court noted that lenders should, instead of invoking the performance bank guarantee, take steps to aid the implementation of the Resolution Plan and achieve its objective. “The Resolution Plan has been approved with the intent and purpose to revive the corporate debtor (Jet Airways),” the court added. According to the resolution plan, JKC needed to deposit a PBG of INR 150 crore with the lenders in two tranches: the first of INR 47.5 crore upon approval of the resolution plan by the committee of creditors, and the second tranche of INR 102.5 crore on the "effective date" when all conditions precedent were fulfilled.

A refundable earnest deposit of INR 15 crore was made to the lenders in July 2020 when JKC submitted its resolution plan. The first performance bank guarantee tranche of INR 47.5 crore was deposited in October 2020 upon the committee of creditors approving the resolution plan. The remaining sum of INR 87.5 crore was deposited in the second PBG tranche on May 20 last year, termed the “effective date,” when all conditions were met.

Story so Far

On July 10, the CoC told the Supreme Court the airline be wound up as the resolution plan approved by the NCLT was not workable. A committee of creditors is formed once a company is admitted to insolvency. It is a body of financial creditors that represents the interest of stakeholders. The voting percentage in the panel is proportional to the amount a financial institution has lent to the company in insolvency.

The counsel informed that the consortium has, time and again, failed on its promise. The deadline to pay INR 350 crore was extended by the National Company Law Tribunal in May. Aviation safety regulator DGCA has renewed with conditions the Air Operator Certificate (AOC) of Jet Airways until September 3. The AOC was re-issued on May 20, 2022. However, since the airline did not start operations, it expired on May 19 this year.

Jet Airways, which stopped operations due to financial crunch, went through lengthy insolvency proceedings and the JKC emerged as the winning bidder. However, the transfer of ownership to JKC is yet to happen amid persisting differences with the airline's lenders. In October 2020, the airline's Committee of Creditors (CoC) approved the revival plan submitted by the consortium of Dubai-based Murari Lal Jalan and the UK's Kalrock Capital. In June 2021, JKC's bid was approved under the insolvency resolution process. However, the implementation of the plan is getting delayed. The consortium appointed Sanjiv Kapoor as its interim CEO in April 2022, who quit the carrier in April this year.

The National Company Law Tribunal (NCLT) on August 17 deferred the hearing of three insolvency pleas filed by aircraft lessors against SpiceJet. SpiceJet on Friday questioned the maintainability of the insolvency plea filed by Wilmington Trust SP Services (Dublin) Limited claiming that the company was just a trustee and not the operational creditor of SpiceJet.

Aircastle's insolvency pleas

SpiceJet had challenged the maintainability of Aircastle's first insolvency plea, in which a notice was issued in May. The low-cost airline had alleged that the plea had technical defects and is not maintainable. Aircastle had filed a response to SpiceJet's application questioning maintainability, the airline on August 17 sought time to file a rejoinder to the response. The case has now been adjourned to September 11.

In June 2023, Aircastle filed a second insolvency plea against SpiceJet. NCLT questioned the maintainability of the aircraft lessor's second insolvency petition against SpiceJet. The tribunal had asked Aircastle's lawyer to explain how the plea is maintainable with some legal precedents.

Today, Aircastle's lawyer cited certain judgments to argue that a second insolvency plea was indeed maintainable. However, SpiceJet objected to the same and sought time to counter Aircastle's argument. The tribunal accordingly adjourned the case. The case has now been adjourned to August 18.

Spicejet had specified two defaults about the validity of the power of attorney and affidavit, further stating that the airline was protected as the default occurred during the Covid time, where the law offers protection under Section 10A of the Insolvency and Bankruptcy Code, 2016.

Celestial Aviation Services’ plea

The lawyer for Celestial Aviation informed the NCLT that he needs some time to sort out certain technical issues that have arisen in his plea. He told the court that SpiceJet owed Celestial Aviation USD 29 million. The tribunal urged the parties to settle the plea without having to pursue litigation and adjourned it to September 11. Now Celestial Aviation Services Ltd is the fourth lessor that has filed an insolvency petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against the budget carrier. The Celestial Aviation matter is also listed for September 15.

Other insolvency pleas against SpiceJet

A total of five insolvency pleas were filed by lessors against SpiceJet. Two pleas are filed by aircraft lessor Aircastle and one plea by lessor Wilmington, while Celestial and Willis Lease Finance have filed one plea each. All the pleas are in different stages of hearing. However, notice has been issued in just one plea.

The NCLT on May 8 issued notice in Aircastle's first plea and sought the airline's response. SpiceJet had accordingly filed a response to the plea and Aircastle sought a short adjournment on May 25 to respond to the airline's reply. Subsequently, SpiceJet filed an application questioning the maintainability of Aircastle's insolvency plea. The airline also questioned the maintainability of Aircastle's second insolvency plea and Wilmington's plea.

SpiceJet’s Trouble with Other Lessors

SpiceJet is facing fresh trouble as two aircraft leasing companies, GASL Ireland and VS MSN, have secured a summary judgment worth USD 15 million against the airline in the London High Court. This judgment adds to the list of legal challenges for SpiceJet, as it has been revealed that at least three more cases have been filed against the airline in the commercial courts in London.

During the court proceedings, it was noted that SpiceJet made several attempts to delay the court's timetable. In one instance, the airline's legal team withdrew from the case, citing non-payment of fees. Subsequently, SpiceJet requested additional time, stating that they were in the process of hiring a new legal team. However, the court was unimpressed with these excuses and insisted that the proceedings must continue. As a result, a summary judgment was entered against the airline.

GASL Ireland and VS MSN are expected to seek enforcement of the UK court's judgment through the National Company Law Tribunal (NCLT) in India. Wilmington Services, another party that had obtained a summary judgment against SpiceJet in London, has already approached the NCLT in India.

In the turbulent world of aviation, Go First Airlines is facing yet another challenge in its bid to resume operations. The airline, formerly known as GoAir, has hit a stumbling block that threatens its comeback: its dedicated workforce, left without pay for three long months, has started looking for alternative employment opportunities.

The Salary Standstill

Employees of Go First Airlines are grappling with frustration and uncertainty as the company grapples with a financial crisis that has led to the non-payment of salaries for the months of May, June, and July. This situation has unfolded despite earlier assurances from the company about retention bonuses and a swift return to normalcy.

Broken Promises

A high-ranking official at Go First Airlines, speaking to Moneycontrol, shed light on the disheartening situation. "We assured our employees that their dedication and hard work during these challenging times would be rewarded with retention bonuses. However, we have been unable to fulfill this commitment due to our financial constraints," the official lamented.

An Increasing Attrition Rate

The consequences of this prolonged salary crisis have been severe. Initially, in May, there was a rush among employees to explore job opportunities elsewhere, driven by the uncertainty surrounding their salaries. However, the attrition rate, though somewhat slowed, has remained significant.

"Around 20 people would quit every week," revealed the official. "While this rate is expected during times of crisis, it is a matter of concern. What's heartening, though, is that a substantial number of our employees who have dedicated five or more years to the airline chose to stay."

However, he claims that employee dissatisfaction has grown and resignations have increased since the beginning of this month. "Around 150 employees, including 30 pilots, 50 cabin crew members, and 50 ground handling and engineering employees, have put in their papers in the last two weeks," stated another airline official.

The Employee Dilemma

For many of Go First Airlines' employees, the decision to seek employment elsewhere hasn't been an easy one. The airline industry has been a part of their lives for years, and they have developed a strong bond with the company. However, the relentless financial strain has forced them to contemplate alternative career paths.

The Long Wait

The employees have been enduring a long and painful wait for their salaries. While some held onto hope that the situation would improve, others had to make pragmatic choices to secure their financial stability.

A third official stated that if employees' salaries are not paid immediately, a flood of resignations is inevitable. "None of the departments have been paid in three months, employee morale is at an all-time low, and a mass exodus is expected," claimed one executive.

The Impact on the Industry

The aviation sector in India, like many others, has been severely affected by the COVID-19 pandemic. The challenges faced by Go First Airlines highlight the broader issues affecting the industry, including the need for financial support and stability to retain skilled personnel.

Conclusion

In the world of aviation, where precision and reliability are paramount, the struggle of Go First Airlines to resume operations amidst a severe financial crisis is a poignant reminder of the challenges faced by the industry. Employees, who are the backbone of any airline, find themselves torn between loyalty to a company they have served for years and the pressing need for financial security.

While the attrition rate may have slowed, it is essential for Go First Airlines to address the concerns of its dedicated workforce promptly. The company's ability to bounce back and soar once again in the Indian skies may very well depend on its capacity to retain its experienced personnel and rebuild trust within its ranks.

With Inputs from Money Control

In the ever-evolving landscape of air cargo, sustainability has emerged as a central theme for airlines worldwide. Lufthansa Cargo, a stalwart in the aviation industry, has recently unveiled a comprehensive plan to revolutionize its cargo operations. This plan not only promises to steer the company towards a more sustainable future but also heralds a shift towards digitalization and a robust commitment to eCommerce.

Setting the Stage

Lufthansa Cargo's Commitment to Sustainability

At the heart of Lufthansa Cargo's vision lies an unwavering commitment to sustainability. As the global awareness of climate change intensifies, the aviation sector faces mounting pressure to reduce its carbon footprint. Lufthansa Cargo, cognizant of this reality, has set forth a plan that will not only make its cargo operations more eco-friendly but also align with the broader goal of achieving net-zero sustainability.

The Announcement

On Friday, August 18, 2023, Lufthansa Cargo made a groundbreaking announcement. The company revealed a four-pronged strategy that will guide its transformation in the coming years.

Restructuring for Sustainability

Investment in Sustainable Technologies

Lufthansa Cargo understands that sustainable practices start with technology. The first pillar of its plan involves significant investments in cutting-edge, environmentally friendly technologies. From fuel-efficient aircraft to innovative cargo handling processes, Lufthansa Cargo aims to be at the forefront of green logistics.

Carbon Offsetting Initiatives

To counterbalance its carbon emissions, Lufthansa Cargo plans to launch ambitious carbon offsetting initiatives. These endeavors will not only reduce the environmental impact of its operations but also contribute to global efforts to combat climate change.

Embracing the Digital Age

Digitalization of Cargo Operations

In an era driven by data and digital innovation, Lufthansa Cargo recognizes the importance of staying ahead of the curve. The third element of its strategy focuses on the digitalization of cargo operations. From streamlined booking processes to enhanced tracking systems, the company aims to offer its customers a seamless and efficient experience.

Lufthansa is eager to carry freight into the 2020s, reflecting the International Air Transport Association's (IATA) digitalization goals at the World Cargo Symposium in April. In July, the airline announced a new effort with long-term partner Kühne+Nagel to develop "paperless lanes" between Europe and Asia, transforming the whole booking and cargo movement procedure into an entirely digital experience.

The digitalization of a general cargo channel from Germany to Hong Kong International Airport (HKG) was a success, paving the way for further digital innovations to expedite cargo operations.

Enhancing eCommerce Support

eCommerce has become a cornerstone of modern commerce, and Lufthansa Cargo aims to be at the forefront of this industry. By bolstering its support for eCommerce businesses, the company seeks to facilitate global trade while maintaining its commitment to sustainability.

Lufthansa Cargo recently unveiled their vision for Frankfurt Airport: The airport will eventually become one of the world's most prominent e-commerce centers. Lufthansa Cargo, in collaboration with two subsidiaries - the logistics service provider heyworld and the customs clearance agency CB Customs Broker GmbH - is therefore actively promoting the growth of the eCommerce sector at Frankfurt Airport.

What This Means for the Aviation Industry

Lufthansa Cargo's bold proposal is poised to have a ripple effect throughout the aviation industry. As one of the industry's leading players, its commitment to sustainability and digitalization sets a high standard for competitors to emulate. This move not only aligns with the growing demand for eco-friendly practices but also demonstrates that profitability and sustainability can coexist.

Comments

"The resilience and speed of the supply chain are decisive success factors for online retailing." "We want to make Frankfurt a leader in this segment by providing comprehensive solutions for shipping, customs clearance, and onward transportation of eCommerce shipments," stated Ashwin Bhat, CEO of Lufthansa Cargo.

Conclusion

Lufthansa Cargo's plan to shape the future of sustainable cargo infrastructure is a testament to the aviation industry's willingness to adapt and evolve. By investing in sustainability, embracing digitalization, and supporting eCommerce, the company is positioning itself as a leader in modern air cargo. This forward-thinking approach is not only good for business but also for the planet.

With Inputs from Lufthansa Cargo

In a groundbreaking development set to redefine Africa's aviation industry, Ethiopian Airlines has embarked on a historic venture with Boeing to manufacture aircraft parts. This momentous collaboration, confirmed by the Ethiopian Investment Commission, represents a significant stride towards enhancing the nation's aerospace capabilities.

As of Friday, August 18, 2023, the stage has been set for Ethiopia to leave an indelible mark on the global aviation map. Let's delve into the intricacies of this remarkable partnership.

Setting the Stage: Ethiopian Airlines Takes Flight

A Visionary Partnership

The Ethiopian Investment Commission, a pivotal player in the country's economic growth, announced the news with great enthusiasm. Ethiopian Airlines, a state-owned carrier and the largest in Africa, is joining hands with Boeing, one of the world's most renowned aircraft manufacturers. This partnership promises to usher in an era of innovation and self-sufficiency in the Ethiopian aviation sector.

A Leap Towards Self-Sufficiency

Ethiopian Airlines' decision to enter the aircraft parts manufacturing arena is a testament to the airline's commitment to self-sufficiency and its desire to reduce dependency on external suppliers. This bold move aligns with Ethiopia's broader vision of becoming a regional aviation hub.

The Boeing-Ethiopian Airlines Joint Venture: What to Expect

Local Involvement with Industrial Parks Development Corporation

This venture isn't solely about Ethiopian Airlines and Boeing; it encompasses local engagement too. The agreement includes the participation of the state's Industrial Parks Development Corporation. This inclusion signifies a holistic approach to the development of Ethiopia's aviation capabilities.

Economic Implications

Ethiopia's economy is poised to benefit significantly from this collaboration. With an expanded aviation industry, job creation, and increased foreign exchange earnings, the nation's economic growth prospects are bound to soar.

Breaking Down the Details

Technological Advancements

The collaboration with Boeing brings an infusion of cutting-edge aviation technology. This knowledge transfer could lead to the development of indigenous expertise in aircraft manufacturing.

The venture will manufacture "aerospace parts, including aircraft thermo-acoustic insulation blankets, electrical wire harnesses, and other parts," according to the commission.

Operational Independence

With the ability to manufacture aircraft parts in-house, Ethiopian Airlines gains a competitive edge by reducing operational costs and increasing flexibility in maintenance and repair.

Capacity Building

This partnership isn't just about producing aircraft parts; it's also about nurturing talent. It opens up opportunities for Ethiopian aviation professionals to gain exposure to world-class manufacturing processes.

"The investment project is expected to create employment opportunities for more than 300 Ethiopians," the statement stated. The commission did not specify a start date for manufacturing.

The Road Ahead

Global Recognition

As Ethiopian Airlines starts manufacturing aircraft parts, it will gain global recognition for its capabilities. This could potentially attract international airlines to seek collaboration and partnerships.

African Aviation Dominance

This venture cements Ethiopian Airlines' position as a key player in Africa's aviation industry. It sets the stage for other African nations to explore similar partnerships and boost their aviation sectors.

Conclusion 

The Ethiopian Airlines-Boeing partnership is a momentous leap for the Ethiopian aviation industry. It not only signifies a move towards self-sufficiency but also holds the promise of economic growth and technological advancement. With the nation's flagship carrier taking this bold step, the skies are no longer the limit for Ethiopia's aerospace aspirations.

With Inputs from Reuters

In the heart of New Zealand lies the Auckland International Airport, a bustling hub that connects the nation to the world. As travelers eagerly anticipate terminal improvements, a shadow of uncertainty looms over the highly anticipated second runway. While the airport remains committed to enhancing passenger experiences, the timeline for runway development has hit a roadblock due to unforeseen circumstances.

Auckland International Airport stands at the crossroads of progress. The airport administration's commitment to modernization and expansion is undeniable, aiming to provide passengers with world-class facilities and services. However, a significant challenge has emerged in the form of a delayed second runway project, raising questions about the synchronization of upgrades and developments.

The Terminal Upgrade

The buzz of anticipation around the terminal upgrade is palpable. From revamped lounges to cutting-edge security systems, the airport is poised to redefine the travel experience. Passengers can expect smoother check-ins, enhanced retail options, and more comfortable waiting areas. This terminal transformation reflects the airport's dedication to remaining at the forefront of global travel hubs.

The airport's overall plans include new roading and transit options to the airport, a NZ $3.9 billion terminal integration plan ($2.4 billion), NZ $75 million ($46 million) in domestic terminal renovations, an expanded apron and runways, a new cargo facility, a new international arrivals facility, and, most importantly, a second runway (in 2041).

Carrie Hurihanganui, Chief Executive of Auckland Airport, stated that small renovations would no longer suffice and that it was time to commit to terminal consolidation.

"It will simplify and accelerate travel by reducing domestic jet to international transfer times to a five-minute indoor walk." A new check-in experience will provide state-of-the-art facilities for domestic and international travelers, including the ability to check in and store your bag at any time of day."

The Long-Awaited Second Runway

The inception of a second runway has been a topic of discussion for years. Envisioned as a solution to accommodate increasing air traffic, the runway was set to propel Auckland International Airport's capacity and efficiency. However, as passengers and planes await the momentous expansion, it seems that the project's realization has been cast into uncertainty.

A Setback in Runway Plans

The delay in the second runway's construction has been a setback for the airport's strategic plans. With growing demand for international travel, the airport initially anticipated that 2018's passenger numbers would rebound by 2026, creating a situation where the runway development could be postponed without hindering operations. However, external factors have complicated this timeline. As noted by the Business Desk, the airport estimates that a second runway is unlikely to be required until the fifth decade of the century, which means that the planned completion date of 2028 has been pushed back 13 years.

Factors Influencing Delay

Various factors have contributed to the unforeseen runway delay. The global pandemic-induced travel restrictions disrupted the projected recovery of passenger numbers. Regulatory hurdles, environmental assessments, and logistical challenges have also played a role in pushing back the runway's commencement. This intricate web of factors underscores the complexities of airport expansion projects.

Navigating Passenger Demands

Auckland International Airport has been navigating uncharted waters concerning passenger demands. While the wait for the second runway prolongs, the airport's commitment to serving travelers remains steadfast. Creative solutions, such as optimizing existing facilities and enhancing operational efficiency, are being explored to accommodate the surge in passenger traffic.

The Projections and Predictions

Predicting the trajectory of air travel demand is akin to reading the winds. As the airport recalibrates its projections, industry experts remain cautiously optimistic about the resurgence of international travel. While the runway's delay necessitates flexibility, the airport's ability to adapt ensures that passengers continue to receive a seamless travel experience.

Looking Beyond: Future of Travel

The airport's journey extends beyond terminal upgrades and runway delays. Technological advancements, changing passenger preferences, and sustainable practices are shaping the future of travel. Auckland International Airport recognizes the importance of aligning its development strategies with these emerging trends to remain a competitive and resilient player on the global stage.

Impact on Airlines

The symbiotic relationship between the airport and airlines has been profoundly affected by the runway's postponement. Air carriers, eagerly awaiting the expanded runway's benefits, now face operational challenges due to capacity limitations. Collaborative efforts between the airport and airlines become pivotal in mitigating disruptions and finding innovative solutions.

Environmental Considerations

As the aviation industry grapples with environmental concerns, Auckland International Airport is committed to responsible growth. Environmental assessments and sustainable practices are integral to the second runway's development. Balancing expansion with ecological sensitivity showcases the airport's dedication to minimizing its carbon footprint.

Airport's Commitment to Excellence

Despite the runway's delay, Auckland International Airport remains steadfast in its commitment to excellence. The ongoing terminal upgrades serve as a testament to the airport's dedication to delivering exceptional experiences to travelers. This commitment extends beyond physical infrastructure, encompassing the entire journey from check-in to takeoff.

Community and Stakeholder Engagement

Airport expansions are not only about infrastructure; they are about the community. Auckland International Airport actively engages with stakeholders, incorporating their insights into development plans. By fostering open communication, the airport ensures that its growth aligns with the interests and needs of the surrounding community.

Economic Ramifications

The delay on the second runway inevitably has economic implications. Beyond the direct benefits of construction and job creation, the expanded airport was expected to drive tourism and boost economic growth. While the delay alters this timeline, the airport's overall contribution to the region's prosperity remains significant.

Conclusion

In the tapestry of progress, delays can emerge as unexpected threads. Auckland International Airport's journey of modernization and expansion is a testament to the complexities of aviation development. The interplay between terminal upgrades and runway delay highlights the delicate equilibrium between immediate demands and long-term vision.

As travelers traverse through the upgraded terminals, the anticipation for the second runway remains alive. The airport's commitment to enhancing the passenger experience endures, navigating through challenges with resilience and innovation.

With Inputs from Auckland Airport, Business Deck