Thursday, October 6, 2022

Govt-ordered probe could dampen Jet Airways’ chances of revival. Here’s why

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New Delhi: The government’s investigations into Jet Airways’ decline and its founder Naresh Goyal could derail attempts by Hinduja Group, Etihad Airways PJSC and Abu Dhabi’s sovereign wealth fund Mubadala Investment Company to revive the debt-ridden airline, sources aware of the matter said.

The news has emerged as a meeting focussing on potential investment took place between Etihad Airways and Hinduja Group met in Abu Dhabi recently. “It’s a tough deal as Jet Airways is losing value every day and there is a lot of mess inside the company.
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The investigations faced by Naresh Goyal, issues of bilateral and landing rights will have to be resolved first before Etihad Airways, The Hinduja Group, and Mubadala Investment Company decide on the investment,” said the person cited above.

Investors want indemnity or quashing of investigations

“The Hindujas are happy to partner Etihad. But their caveat is to first resolve all pending issues before making investments. These include ongoing investigations of the airline by security agencies,” the source said.

“No investor will be ready to take on past liabilities if investigations are going on. Unless they are given indemnity that the new management will not be responsible for any past action,” another official said.

The investigations underway

Currently, the Income-Tax Department is looking into a possible tax violation case against Jet Airways, while the Ministry of Corporate Affairs (MCA) is probing the airline’s books after the Registrar of Companies (RoC) had submitted a report to the ministry highlighting instances of violation of Companies Act in the airline. The Enforcement Directorate (ED) too is trying to ascertain if the airline has certain foreign direct investment (FDI) norms were violated when Etihad picked up a stake in the airline in 2014.

The backdrop

Jet Airways founder Naresh Goyal and his wife Anita Goyal were recently stopped from flying abroad by the immigration following orders from the MCA. The ministry had requested a lookout circular for Goyal in order to prevent him from flying out of the country while the investigation was underway.

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