De­layed Salaries at Jet can Pose a Se­cu­rity Risk: DGCA

Ob­ser­va­tion made in au­dit re­port by avi­a­tion reg­u­la­tor; haven’t re­ceived any re­port: Jet

The Economic Times - - Front Page - Mi­[email protected] times­group.com

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.

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