Mumbai: Indian Oil Corp. Ltd stopped supplying aviation fuel to Jet Airways (India) Ltd at noon on Friday before rescinding its decision hours later, after the government likely stepped in to avert a crisis at the cash-strapped airline.
The decision to stop providing fuel to Jet Airways took effect from noon on Friday across the country because of non-payment of dues, an Indian Oil spokesperson said.
The decision was rolled back at around 4.30pm.
Later, a senior Indian Oil official said on condition of anonymity that Jet Airways hadn’t paid its dues yet. The official, however, did not say how much the airline owes the New Delhi-based public sector company.
A Jet Airways spokesperson confirmed that Indian Oil had resumed supply of ATF but did not comment on whether the airline had cleared its dues, and what had led to Indian Oil rescinding its decision.
An industry official said it is likely that the government had stepped in to ask Indian Oil to extend a credit line which would have allowed it to resume fuel supplies and for Jet Airways to continue operations.
Queries sent to the civil aviation secretary did not yield any response till press time.
Jet Airways, which has been struggling to continue its operations, hasn’t paid salaries to a section of its staff since January. Recently, the airline informed its employees that the disbursal of March salaries, too, would be deferred.
Jet Airways has been unable to cope with rising costs and has also deferred interest and lease rental payments to lessors. Lessors have either grounded or repossessed aircraft earlier leased to the Mumbai-headquartered airline.
Lenders to Jet Airways said on Thursday that bids for a stake sale in the airline will be invited on Saturday and these will have to be submitted by 9 April.
The Jet Airways stake sale will be completed in a time-bound manner, said lenders led by State Bank of India. However, if there are no satisfactory bids, the lenders may also explore initiating bankruptcy proceedings against the beleaguered airline.
Jet Airways is waiting for a cash infusion pledged by its lenders for paying aircraft lessors and clearing part of the salary dues.
Jet Airways also needs to quickly re-induct its grounded planes. The airline, which is operating only about 26 of its original fleet of 119 aircraft, cannot afford to let the numbers go below 20, as that could trigger a government review of whether it can continue to fly international routes.
On Friday, Jet Airways shares fell 1.50% to ₹256.05 apiece on the BSE while the benchmark Sensex gained 0.46% to end the day at 38,862.23 points.