Jet Airways had a gross debt of  ₹8,411 crore as of September-end, including aircraft debt of  ₹1,851 crore. (Reuters)
Jet Airways had a gross debt of 8,411 crore as of September-end, including aircraft debt of 1,851 crore. (Reuters)

Jet Airways cancels flights as four more planes are grounded by lessors

  • About 60 Jet Airways planes—half of its pre-crisis fleet—are now grounded, even as a deadlock between Jet lenders and Etihad over a bailout continues
  • As a result, in yet another default, Jet Airways says it was delaying interest payment due on 19 March to debenture holders

Mumbai: Cash-strapped Jet Airways (India) Ltd said lessors had grounded four more planes on Monday because of non-payment of dues, taking the total number of such aircraft to about 60, or about half its pre-crisis fleet. The groundings resulted in several flight cancellations on Monday.

With the deadlock between Jet Airways lenders and Etihad Airways PJSC’s board over cash infusion showing no sign of ending, Jet Airways told exchanges it was delaying interest payment due on 19 March to debenture holders.

Etihad Airways owns 24% stake in Jet Airways.

Etihad’s board has not agreed to the provisional debt resolution plan presented by lenders seeking to inject much-needed capital into the airline. As of date, about half the airline’s fleet of 119 has been grounded by lessors seeking repossession of their aircraft.

Jet Airways has now downsized its operations, halting flights to foreign destinations, including Abu Dhabi, one of the two international hubs of the airline. Amsterdam is Jet’s other hub 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 aviation consultant with knowledge of the matter. “I don’t think Etihad will pull out as it will be difficult to get investors willing to buy the stake at a good value."

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 reaccommodating 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.

Meanwhile, Jet Airways chairman Naresh Goyal, in a letter to employees, said: “While our discussions with our lessors continue and we keep them updated at all times, as a responsible airline we have consciously and proactively decided to curtail our schedule and network according to the number of aircraft we are currently operating.

“I am fully aware of the hardships each of you are undergoing owing to the stretched-out ongoing dialogue and deeply, most sincerely appreciate your patience, perseverance and your incredible dedication and loyalty."

Goyal had earlier in March written a letter to Jet Airways’ employees assuring them that chief executive officer Vinay Dube and his team would update them on developments by 18 March.

“The current situation is difficult for pilots as there’s a lot of uncertainty about the future of the airline," a Jet Airways pilot said on condition of anonymity.

However, despite cancelling several flights, Jet Airways continues to roll out discounts inviting passengers to fly with it. Aviation regulator DGCA hasn’t yet asked the airline to stop advance booking of tickets.

A DGCA spokesperson didn’t comment on whether the watchdog planned to do this in light of Monday’s developments.

On Monday, Etihad Airways chief executive Tony Douglas met State Bank of India (SBI) chairman Rajnish Kumar to discuss the debt resolution plan for Jet Airways.

“As a minority shareholder, Etihad is working closely with Indian lenders, the company and key stakeholders to facilitate a solution for Jet Airways," a spokesperson for Etihad said in an emailed statement.

SBI did not respond to queries.

Mint reported last week, citing unidentified people, that Etihad Airways was unlikely to agree to a provisional debt resolution plan proposed by lenders for crisis-hit Jet Airways.

The report said that several Etihad board members had expressed reservations about the terms proposed by the lenders, including the addition of two nominee directors from the promoter group of Jet Airways and its promoter Goyal’s demand for exclusion of the perpetuity clause, which capped his shareholding at 22%.

The draft document seeks a fund infusion of at least 4,200 crore, including an unidentified entity investing in the cash-strapped airline, and Goyal and his wife giving up executive powers and board duties.

Jet Airways had a gross debt of 8,411 crore as of September-end, including aircraft debt of 1,851 crore.

On Monday, Jet Airways shares rose 0.87% to 237.90 apiece on the BSE, while the benchmark Sensex gained 0.19% to 38,095.07 points.

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