Delayed Salaries at Jet can Pose a Security Risk: DGCA
Observation made in audit report by aviation regulator; haven’t received any report: Jet
New Delhi: Delayed salary payments at Jet Airways have the potential to pose a safety risk, the Directorate General of Civil Aviation (DGCA) said in an audit of the carrier, according to people with knowledge of the matter. The audit findings have been shared with the Naresh Goyalpromoted airline.
“Non-payment of salaries is a concern and the DGCA audit flags it off as a type 2 concern,” said a government official who did not want to be identified. The airline has not yet sent its response, according to the people cited above.
Type 2 concerns are those that don’t impact the safety of the airline directly but have the potential to do so. In September, one of the carrier’s pilots had forgotten to activate a switch that mainta- ins pressure in the aircraft, according to government officials.
The airline said it hadn’t received any report.
“Jet Airways is not in receipt of any such reports as mentioned in your query and is therefore unable to comment,” an airline spokesperson told ET. “The company continues to run normal operations, as per schedule and with appropriate safety approvals as per the DGCA. The airline is current in terms of payments as per the disbursement schedule that has been shared with the specific employee group.”
The airline, which is struggling to meet costs, has not been paying salaries to its senior management (general managers and above), including pilots, engineers and crew for more than two months now.
“We have not been paid salaries since October. In fact, the airline has paid only 50% of the salaries for that month too,” said a senior Jet executive on condition of anonymity. The airline has said it has paid October salaries. In November last year, it had promised pilots that salary dues would be paid by April.
The airline had also sought to impose a pay cut of up to 25% for senior management but had to hold off due to protests by them.
Jet, India’s second-biggest airline by market share, is facing the worst financial crisis in its 25-year existence, with mounting losses and debt. It has grounded planes, laid off staff and trimmed unviable flights to stay afloat.
The airline defaulted on loan repayments in December and failed to pay aircraft lessors on time, prompting some of them to threaten to take back planes.
Jet has total debt of over Rs 8,000 crore and, according to estimates by ICRA, its loan repayments until FY21 total Rs 6,312 crore. A consortium of local lenders led by State Bank of India has also not yet agreed to a proposal to convert debt to equity in Jet. The lenders have been meeting every week, trying to stitch together a bailout plan for Jet. Goyal has meanwhile met government officials at the highest level, appealing for assistance to save his airline.
Banks, fearing another Kingfisher Airlines-type fiasco, are reluctant to throw Jet Airways a lifeline without covering their exposure with adequate collateral. ET reported on Monday that Etihad Airways, which owns 24% of Jet, has proposed several conditions for investing further in the carrier.