New Delhi: State Bank of India (SBI) has reportedly said it will not be able to release interim funds to pay the company’s employee salaries. SBI, which is leading a consortium of lenders to Jet Airways, has told the Regional Labour Commissioner (RLC) that it cannot get involved in a clash between the airline’s management and staff, as it is not an equity holder, Moneycontrol.com reported.
The bank said it cannot grant credit facilities to Jet Airways since they are based on cash flows. Since the airline temporarily suspended operations on April 17, it cannot generate sufficient cash flows.
“Where there is no possibility of assured generation of future cash flows, the bank is not in a position to release any funds,” SBI said, in a communication viewed by the paper. Moneycontrol could not independently verify the story. Jet Airways, which has around 22,000 employees, has not paid its staff salaries since March. Also read: Etihad, Naresh Goyal, Hindujas, AdiGro: Mega alliance may bid to save Jet Airways
SBI also highlighted that the bidding process has not yet conclusively found a new investor for Jet Airways. “In the absence of a confirmed and binding bid, no assurance of release of funds can be given for the said purpose,” the lender said in the communication to the RLC. SBI also requested the RLC to not involve it in future conciliation meetings between the airline’s management and employees.
Banks could buy a stake of up to 20 percent in Jet Airways, a media report suggests. Around 200 Jet Airways’ employees held a protest outside the civil aviation ministry’s office in New Delhi on May 21, demanding a resolution to the airline’s troubles and payment of their salaries. Jet Airways’ pilots and cabin crew have been looking for alternate employment with rival airlines.