EY selected to conduct audit on Jet Airways for creditors consortium

As Jet Airways continues its efforts to stabilise its financial situation, creditors to the airline – led by the State Bank of India – are set to appoint global professional services firm EY as the auditors for the airline. EY was selected over Big Four rival Deloitte after careful consideration by the interim management committee.

The interim management committee itself is currently being formed, but sources have indicated to the Economic Times that Big Four accounting and advisory firm EY will be the auditor of choice once the committee is formed. The indication comes after EY was already appointed for a forensic audit in December.

Jet Airways has been struggling financially for several months now, which has had repercussions on its internal operations as well as on its value in the stock exchange, which had dipped by 2% at the start of December last year. Internally, the firm has been forced to ground flights and delay salary payments, leading to considerable backlash.

Currently, the airline has a fleet of 35 aircraft in circulation, as opposed to nearly 120 aircraft when it was operating in relative financial stability. A number of consulting firms have since ben involved in rescuing the airline’s finances. In December, Jet Airways appointed McKinsey & Company as well as BCG for support.

While McKinsey & Company was tasked with damage control strategies to help cut down operational costs, BCG was tasked with devising new strategies to regenerate previous levels of revenue. Meanwhile, a number of external parties have been interested in offering financial aid to the airline.

Earlier this year, Eithad Airways appointed global consultancy firm Alvarez & Marsal to conduct due diligence on Jet Airways, before finalizing their intentions of increasing their ownership share beyond the current level of 24%. The conditions for this takeover would be the surrender of control by Founder and Chairman at Jet Airways Naresh Goyal.

Meanwhile, the creditors that are looking to offer financial support to the airline have also been seeking support with auditing the company. A consortium of creditors led by the State Bank of India appointed EY to conduct a forensic audit of the airline late last year, and are now looking to extend this collaboration.

The interim management committee reportedly considered a number of major consulting firms for the role of auditor, including fellow Big Four accounting and advisory firm Deloitte. Following the audits, the creditors will move to acquire a 50% ownership in the airline through the conversion of debt into equity.