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Jet Airways cancels all operations after banks reject funding request

  • Jet Airways said the company was not able to pay for fuel or other critical services to keep the operations flowing
  • In March, Naresh Goyal was forced to cede control of the airline, after Jet, saddled with over $1 bn in debt, defaulted on payments to banks, aircraft lessors

New Delhi: Distressed airline Jet Airways (India) Ltd. said on Wednesday it is compelled to cancel all its international and domestic flights with immediate effect as it has not received emergency funding from lenders or any other source. The last flight will operate today.

In a statement to stock exchanges, Jet said the company was not able to pay for fuel or other critical services to keep the operations flowing.

“Late last night, Jet Airways was informed by the State Bank of India (SBI), on behalf of the consortium of Indian Lenders, that they are unable to consider its request for critical interim funding. Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going," India’s second largest airline said.

This decision has been taken after a painstaking evaluation of all alternatives that were made available to the company and after receiving guidance and advice on the same from its board of directors, it said.

Jet Airways has informed the Directorate General of Civil Aviation (DGCA), and the Ministries of Civil Aviation and Finance and other relevant government institutions, of this course of action, the release added.

In March, founder Naresh Goyal was forced to cede control of the airline, after Jet Airways, saddled with over $1 billion in debt, defaulted on payments to banks and aircraft lessors.

According to reports, Jet owns 17 planes, mostly wide bodied Boeing 777s and Airbus A330s, while the rest are leased. It had a fleet of 124 aircraft as of December but the owned planes have already been collateralised against funds that were raised to finance their purchase.

Since January, the airline has not paid salaries to a section of its staff, including pilots and engineers, while lessors have taken possession of planes after the airline failed to pay fees.

Essential services needed to support guest services and the re-commencement of the flight operations will be kept onboard until further notice.

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