Jet grounds more planes, delays interest payments
CASH CRUNCH Temporary liquidity constraints behind delay in payments, says Jet
NEWDELHI: Cash-strapped Jet Airways (India) Limited said on Monday t hat l essors have grounded four more planes because of non-payment of dues.
The grounding of a total of close to 60 aircraft by the carrier’s lessors have resulted in the airline cancelling several flights. It also informed the exchanges that it is delaying payment of interest to debenture holders due on March 19 because of temporary liquidity constraints.
These developments come amid reports of a deadlock between the lenders and Etihad Airways PJSC’S board of directors, who have not agreed to the provisional debt resolution plan put forward by lenders seeking to inject much-needed capital into the airline.
Lessors are seeking repossession of their aircraft. This brings the count of total grounded aircraft at Jet Airways to about 60. This is half of the total aircraft in the airline’s fleet, which stand at 119. Jet Airways has now reduced its overall operations, temporarily halting operations to foreign destinations such as Abu Dhabi, which is one of the two international hubs of Jet Airways. Dutch capital Amsterdam is the European gateway for the airline for its operations to Europe and beyond.
“Stopping flights to Abu Dhabi is a tactic by Jet Airways to put pressure on Etihad Airways either to invest and fund its rescue or sell its stake to someone else,” said an industry source in direct knowledge of the matter. “I dont think Etihad will pull out as it will be difficult to get investors willing to buy the stake at a good value,” the person said.
Etihad Airways owns 24% stake in Jet Airways.
Queries sent to Jet Airways seeking details on the flights cancelled by the airline on Monday yielded no response.
“The company is also making all efforts to minimize disruption to its network…and is proactively informing and re-accommodating its affected guests. The company also continues to provide required and periodic updates to the Directorate General of Civil Aviation (DGCA) in this regard,” Jet Airways told the exchanges.
However, despite Jet Airways cancelling several flights, it continues to roll out discount offers inviting passengers to fly with them.
The DGCA hasn’t yet asked the airline to stop advance booking of tickets. A DGCA spokesperson didn’t comment on whether the watchdog plans to do this in light of the developments.
On Monday, Etihad Airways chief executive Tony Douglas met State Bank of India’s (SBI’S) chairman Rajnish Kumar to discuss the debt resolution plan for Jet Airways.
Queries sent to Etihad Airways and SBI, seeking more information about the discussions, yielded no response till press time.
Mint had last week reported that Etihad Airways is unlikely to agree to a provisional debt resolution plan proposed by lenders for the crisis-hit Jet Airways, quoting sources. The report had added that several Etihad board members have expressed reservations about the terms proposed by the lenders that included adding two nominee directors from the promoter group of Jet Airways and Jet Airways’ promoter Naresh Goyal’s demand for exclusion of the perpetuity clause, which capped his shareholding to 22%.
The draft document seeks a fund infusion of at least ₹4,200 crore, including an unidentified white knight investing in the cash-strapped airline and Goyal and his wife giving up executive powers and board duties.
Jet Airways employees are yet to hear from their management on the current crisis. Goyal had earlier this month written a letter to the airline’s employees assuring them that the airline’s chief executive officer Vinay Dube and his team would update them on developments by March 18.
“We are yet to hear anything from the management,” a senior Jet Airways pilot said on Monday evening.
“The current situation is difficult for pilots as there’s a lot of uncertainty about the future of the airlines,” the pilot said seeking anonymity.