Jet Airways’ 777-300ERs to be Sold Following JKC’s Failed Appeal

Jet Airways (JAI) faces a significant shift in its asset portfolio following a recent legal decision. The National Company Law Appellate Tribunal (NCLAT) has ruled against the consortium attempting to acquire the airline, leading to the sale of three Boeing 777-300ER aircraft owned by Jet Airways. These aircraft will now be transferred to special purpose vehicles (SPVs) controlled by the Challenge Group, as per the court’s decision.

This ruling came after the consortium (JKC), comprising Murari Lal Jalan & Florian Fritsch, appealed an earlier order by the National Company Law Tribunal (NCLT). The NCLT had directed Jet Airways’ monitoring committee to honor a 2022 agreement allowing Ace Aviation to purchase the three aircraft. The aircraft in question are currently stored at Mumbai International.

The NCLAT’s decision also dismissed a separate attempt by the All India Jet Airways Officers and Staff Association to prevent the sale. The court reasoned that holding onto the grounded aircraft was not in Jet Airways’ best interests.

Eshel Heffetz, CEO of Challenge Group, expressed satisfaction with the NCLAT’s decision, emphasizing the importance of facilitating the completion of the sale. Heffetz’s confidence in the court process and the positive outcome for his company reflects the legal complexities surrounding airline bankruptcies and asset sales.

Jet Airways, which ceased operations in April 2019, was awarded to JKC for acquisition by the NCLT. Initially, JKC had planned to secure new aircraft for the airline’s relaunch, showing no interest in retaining the 777-300ERs. However, as their relaunch plans faced difficulties, JKC shifted its strategy, attempting to retain these aircraft. The employees’ union argued that the aircraft should not be sold until their dues were cleared. Nevertheless, the NCLAT clarified that the sale proceeds would be deposited in an escrow account for distribution as per the NCLT-approved resolution plan.

Respondents in JKC’s appeal included Ace Aviation VII Ltd, Ace Aviation IX Ltd, Ace Aviation X Ltd, the State Bank of India, JC Flower Asset Reconstruction Pvt Ltd, Punjab National Bank, and Ashish Chhawchharia. The three Ace SPVs, controlled by Challenge Airlines MT (X6, Malta International), a Challenge Group subsidiary, had already paid a USD4.6 million deposit on the aircraft in 2022.

Heffetz expressed his eagerness to finalize the acquisition promptly, citing concerns about potential asset value loss due to prolonged storage and deterioration of the aircraft. This sale marks a critical juncture for Jet Airways as it navigates through its financial and operational restructuring, reflecting the dynamic and often unpredictable nature of the aviation industry.