Jet may ground all flights, govt moves to check fares

CASH-STRAPPED Airline asks for interim funding of ₹400 crore from lenders

MUMBAI/NEW DELHI: The future of cash-strapped Jet Airways (India) Ltd hung in balance on Tuesday, with the management saying late in the evening that it was awaiting “emergency liquidity support” of ~400 crore from a consortium of banks led by the State Bank of India, failing which it would have to temporarily suspend its already thinned operations.

Earlier in the day, civil aviation minister Suresh Prabhu called for a review of issues related to struggling Jet Airways, including rising fares on other airlines and flight cancellations.

“Directed Secretary @MOCA_GOI to review issues related to Jet Airways, especially increasing fares, flight cancellations etc,” Prabhu said in a tweet. After a review, the aviation regulator asked airlines to reduce prices on 10 routes.

However, there were conflicting reports on whether these funds would be forthcoming. Bloomberg News reported, citing people familiar with the matter, that bankers have refused to pump in any more money into the airline.

Banks are keen and willing to help Jet Airways, provided promoters show firm commitment in infusing funds with a clear-cut roadmap, two bankers with direct knowledge of the matter said on condition of anonymity. The promoters include Etihad, which has a 24% stake in the airline. The bankers added that they would like the government to intervene.

“In fact, the government should step in to resolve the matter in a resolute manner. Instead of holding separate meetings with bankers and promoters, the government should bring all the stakeholders on the table and secure commitments from promoters. It is not difficult, as [Jet Airways founder] Naresh Goyal is already out,” one of the bankers said.

“Lenders are committed to Jet Airways’ revival. SBI and SBI Capital are working on a package but it has not been finalised” Punjab National Bank (PNB) managing director Sunil Mehta said.

Promoter Naresh Goyal has already stepped down from the board of the airline and on Tuesday pulled out of bidding, deciding not to try to retake control of the airline that he ran until last month. The development came after some of the prospective investors objected to his entry.

HT learns that bidders Etihad and TPG Capital are among those that protested Goyal’s attempt to bid for the airline.

The first banker claimed that Etihad may be playing hardball by refusing to infuse any money so as to reduce the asking price. Etihad didn’t respond to an e-mail seeking comment.