India’s Jet Airways halts flight operations indefinitely

MUMBAI/NEW DELHI (Reuters) – Embattled Jet Airways halted all flight operations indefinitely on Wednesday after its lenders rejected its plea for emergency funds, potentially bringing the curtains down on what was once India's largest private airline.

The carrier, saddled with roughly $1.2 billion of bank debt, has been teetering for weeks after failing to receive a stop-gap loan of about $217 million from its lenders, as part of a rescue deal agreed in late March.

"The airline has been left with no other choice today but to go ahead with a temporary suspension of flight operations," the company said in a two-page statement late on Wednesday.

At its peak, Jet operated over 120

planes and well over 600 daily flights. The airline, which has roughly 16,000 employees, has in recent weeks been forced to cancel hundreds of flights and to halt all flights out of India, as funds have dried up.

Intense competition from low-cost carriers, like Interglobe-owned IndiGo and SpiceJet Ltd., together with higher oil prices, hefty fuel taxes and a weak rupee have piled pressure on the airline in recent months.

In its statement on Wednesday, the airline thanked its loyal customers for their support over 25 years and said it "sincerely and profusely apologises for the disruption to the travel plans of all its guests."

"Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going," the airline said.

Two sources at state-run banks told Reuters that the banks had rejected a request for 4 billion rupees ($58 million) from Jet to keep itself temporarily afloat.

"Bankers did not want to go for a piecemeal approach which would keep the carrier flying for a few days and then again risk having Jet come back for more interim funding," said one of the bank sources directly involved in Jet's debt resolution process.

The airline said it would continue to work with its banks, who are trying to identify an investor to buy a majority stake and try to turn Jet around. Jet said that it hopes to resume flying soon.