The Jet Airways bailout plan, which will end up making the airline an effective subsidiary of public sector banks after they convert a part of their loans into equity at the nominal cost of ₹1, is no rescue plan at all. Rather, it will compound the airline sector’s woes, as we will now have two publicly owned, loss-making airlines—Air India Ltd and Jet Airways (India) Ltd—on the taxpayer’s books. The intention is not to nationalize the latter, and the stated intention is to privatize Air India, too, but this is the scenario right now. This kind of no-hoper package is being proposed because Jet Airways is sinking at a politically inconvenient time, when elections are around the corner.
The logical response to Jet Airways’s financial distress is sale to a stronger promoter or a reference to the insolvency courts, not more bank accommodation.
