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Jet Airways crisis: Crucial day for airline as lenders meet today; final decision on fund infusion expected

FP Staff

The future of Jet Airways' operations depends on the outcome of the meeting between the airline's management and lenders on Monday.

The meeting with lenders is reportedly expected to take a final decision on the quantum of funds to be infused immediately to avert a possible shut down of the airline. A meeting between the airline management and its major lender SBI last Friday could not take a decision on the fund infusion issue.

An urgent meeting to discuss the Jet situation was held at the prime minister's office on Friday, which was also attended by the country's aviation secretary, Pradeep Singh Kharola.

After participating in the meeting at the PMO, Kharola held a meeting - through video conference - with the management of Jet Airways.

After the meeting, Kharola said the carrier had money to operate 6-7 planes over the weekend and that the lenders would have to decide how many jets it could fly after Monday afternoon, news channel ET Now reported on Friday.

When asked if the airline has enough funds to keep the operations going on till Monday, the secretary replied in affirmative. Kharola said Jet will meet bankers on Monday for an infusion of funds in the interim, the TV channel added.

Kharola said that the bankers have asked the airline to "rework its proposal" regarding interim funding.  "Monday again, they (Jet Airways) will be approaching the bank. Depending on what the banks decide, the future course of action would be taken," he said.

"Till Monday afternoon, (six to) seven planes would be flying. After that how many would fly would depend on their interaction with bankers," he added.

On Friday, the airline could operate only 11 aircraft, leaving passengers stranded at various domestic and international airports.

A Business Standard newspaper report on Sunday said Jet's lenders, led by the SBI, are considering a proposal to infuse 10 billion rupees ($145 million) to keep the airline afloat once Jet submits a plan on how it intends to use the money.

Jet's lenders, who have been seeking a new investor to take a stake of up to 75 percent in the airline, hope to complete the selection of bidders by 7 May after SBI extended a deadline.

Abu Dhabi-based Etihad Airways, which owns a 24 percent stake in Jet, private equity fund TPG Capital, India's National Investment and Infrastructure Fund and ousted chairman Naresh Goyal are among those to have bid, the Business Standard said.

Last month, an SBI-led consortium of lenders had taken management control of the airline post a debt-recast deal, following which the lenders had proposed to infuse as much as Rs 1,500 crore to the carrier to keep it afloat till the time it gets an investor.

Naresh Goyal owns 50.1 percent in the airline, most of which is pledged with the consortium of lenders. Goyal had last month agreed to pare down his stake to 25.5 percent for an emergency fund of Rs 1,500 crore from the lenders, and leave the board but the process is yet to be completed due to procedural delays.

Airfares have been on an upswing across India for the last few weeks due to sharp decline in number of flights primarily caused by grounding of 90 per cent of the 119-aircraft fleet of Jet Airways.

With agency inputs

Also See: Jet Airways extends suspension of international operations till Monday as airline faces worst existential crisis since launch

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