The standoff between out-of-pocket creditors and the consortium attempting to finalise their takeover of Jet Airways (9W, Mumbai International) continues, with the latest drama involving who is responsible for pension fund payments totalling INR2.75 billion rupees (USD33.7 million) due to former employees. This comes as the Kalrock Capital-Murari Lal Jalan consortium moves to conserve day-to-day operating cash.

The Jalan-Kalrock consortium has reportedly missed an INR520 million (USD6.4 million) pension fund payment instalment due on November 11 and is now arguing that the banks need to pay a bigger share of the amount due. The National Company Law Appellate Tribunal (NCLAT) which supervised Jet Airway's bankruptcy and resale had recently ordered the consortium to pay outstanding pension fund amounts, but that is now being challenged.

Creditors, led by a syndicate of banks, which have already taken substantial losses on the Jet Airways bankruptcy, have countered that the consortium needs to abide by its previous commitments and are refusing to hand over ownership of the airline until this happens.

Aggravating tensions is a May 2021 agreement that saw Jalan-Kalrock agreeing to pump INR13.75 billion (USD168.7 million) into Jet but so far only INR1.5 billion (USD18.4 million) has materialised. Led by the State Bank of India, the creditors agreed to a settlement of INR4.75 billion (USD58.3 million), which remains largely unpaid. Now, the consortium faces an end of November NCLAT agreed deadline to make a payment of INR1.85 billion (USD22.7 million) to Jet Airways lenders. But Jalan-Kalrock says all is above board regarding payments and points out that the bulk of the headline INR13.75 billion figure is capital commitments to relaunch the airline, not the payment of old debts.

“Jalan-Kalrock Consortium has deposited Rs.150 crores as required under the court-approved resolution plan with the lenders, with the remaining amounts to be invested only after the next steps of NCLAT are fulfilled in terms of handover of the company (Jet Airways) to us," said a statement issued by the consortium.

But the consortium's inability to complete the Jet Airways takeover is starting to create some financial pressures, with Jalan-Kalrock saying that it will need to make tough decisions to manage cash flow as news also emerged that some of the airline's 230-250 employees will take pay cuts or go on leave without pay from December 1.

"To set the record straight (as many numbers and percentages flying about): 1. Two-thirds of staff not impacted at all; 2. Of the remaining one-third, most will be on temp pay reduction. 3. Only a small portion of the total (~10%) will be on temp leave without pay. 4. No staff let go," said Jet Airways CEO Sanjiv Kapoor on social media on the weekend. "These are all good people who have been working hard to try to do what has never been done before: revive an airline that has gone bankrupt. However, with the ownership transfer timeline slipping due to factors outside our control, some temporary hard decisions had to be taken."

Kapoor also notes that he is one of the people taking a pay cut. The CEO had hoped to launch flights in the second half of 2022, but unable to solve the imbroglio with the banks and complete the acquisition deals, Jet Airways remains firmly grounded. However, Kapoor does say that he has letters of intent signed regarding planes, engines, catering, ground handling, and IT systems.