Jet Airways retail shareholders stare at total loss after liquidation order: Report

Jet Airways' stock, which had hit a 5% lower circuit following the court's decision, closed at Rs 34.04 on the Bombay Stock Exchange.

In Short

• Jet Airways retail investors at risk of total loss after Supreme Court ruling
• Supreme Court orders Jet Airways liquidation, voiding revival consortium bid
• Jet Airways stock hits lower circuit, closes at Rs 34.04

Around 1.43 lakh retail investors in Jet Airways are facing a potential wipeout after the Supreme Court ordered the liquidation of the airline on November 7, reported moneycontrol.com.

Jet Airways’ stock, which had hit a 5% lower circuit following the court's decision, closed at Rs 34.04 on the Bombay Stock Exchange.

The court’s ruling overturned the National Company Law Appellate Tribunal's (NCLAT) previous decision, which had approved the transfer of Jet Airways to the Jalan-Kalrock consortium. The court upheld the appeal by the State Bank of India (SBI) and other creditors, stating that the consortium had failed to meet the initial financial commitments required in the resolution plan.

As of September 30, retail shareholders held 19.29% of Jet Airways, with investments of less than Rs 2 lakh each.

Major institutional shareholders included Punjab National Bank (26%), Etihad Airways (24%), and Jet’s original promoters (25%). At the current market valuation of Rs 386.69 crore, retail shares in the airline amount to roughly Rs 74.6 crore, added the report.

Despite the airline being grounded since 2019, retail investors continued trading in the stock, anticipating a possible revival.

However, as recently as 2023, the Jalan-Kalrock plan proposed reducing public shareholding from 25% to 0.21%, which would have severely impacted market value for public shareholders, though it did not deter many investors.

According to BSE data, Jet’s shares worth Rs 7.62 lakh were traded daily on average this year. The stock peaked at Rs 63.15 on March 22 but has since fallen by 46%.

Now, with liquidation underway, Jet’s retail shareholders may face a fate similar to that of Dewan Housing Finance Limited (DHFL) shareholders, whose shares were extinguished after the mortgage lender's takeover by Piramal Group through an Insolvency and Bankruptcy Code process.

Once a leading airline in India, Jet Airways faced rising debt and operational costs, along with intense competition from budget carriers. By 2019, financial pressures left Jet unable to meet payroll or vendor obligations, leading to a loss of consumer confidence and eventual suspension of operations.

The airline’s debt, which exceeded Rs 7,500 crore by April 2019, prompted lenders, led by SBI, to initiate insolvency proceedings with hopes of recovering dues. A revival proposal from Kalrock Capital and Murari Lal Jalan gained approval from the National Company Law Tribunal (NCLT) in 2021, offering a potential path forward.

However, the plan soon encountered obstacles, with disputes over payment schedules and delays in financial commitments by the consortium.

By 2023, the lack of progress in meeting financial obligations diminished hopes of a revival. The prolonged conflicts among stakeholders and lack of a feasible solution ultimately led the lenders to seek liquidation.