Cash-strapped Jet Airways is staring at a closure after the airline on Monday failed to find financial support from lenders. Chief operating officer Vinay Dube said lenders headed by State Bank of India (SBI) were yet to commit interim working capital.
The full-service carrier operated just 6-7 planes of its fleet of 119 aircraft on Monday. Civil aviation rules in India require an airline to operate a minimum of five aircraft to keep its operating permit valid.
As you are aware, we have been working with the lenders to secure interim funding for our operations. The interim funding has not been forthcoming thus far, Dube said in a letter to employees.
Jet had sought interim loans from its lenders on Friday but was asked to restructure its demand, civil aviation secretary Pradeep Kharola had told reporters. Meanwhile, the lenders have received at least eight bids from prospective buyers for the beleaguered airline. Final bids need to be submitted by end April. Lenders are offering an equity stake between 31.2% and 75% along with control and management of the airline.
The board of the full-service carrier,whose operations have been seriously hampered by a shortage of working capital and non-payment to lessors, will on Tuesday discuss the current state of negotiations with the lenders to chart out a survival strategy.
Jet has extended the cancellation of international operations till April 18 due to the cash crunch. The airline stopped international flights last week, it also cancelled all its west-bound operations to SAARC and ASEAN countries on Sunday. Officially, Jet flies 44 daily flights, not possible to achieve with the current fleet of five ATRs or smaller planes and one Boeing 737.
Jet has not paid its 20,000 employees their March salaries; pilots have not been paid since January while dues to other employees aircraft maintenance engineers and senior management also remain unpaid for several months. The airline has not paid its vendors and lessors and has defaulted on payment to banks and oil marketing companies. A sum of `4,000 core is to be paid to vendors and other business partners immediately.
Please note that the current status of our engagement with the lenders and other related matters shall be placed before the Board in the meeting scheduled for tomorrow morning, where the Management will seek guidance from the Board on the next steps forward, Dube said.
Around 300 of Jet s 1,100-strong pilot union, the NAG, gathered at the Andheri headquarters on Monday demanding unpaid dues and made an appeal to the Prime Minister and lenders to save the airline. We want to request the PM to intervene and save 20,000 jobs here and also appeal to the banks to release the much needed funding for the airline. We want the airline to fly, Asim Valiani, vice-president, NAG, said.
We need a clarity on the way forward for the airline. We also have EMIs have to fund our children s education. We know it is a tough time for the airline and we will stand by the management, he added. Among the interested bidders were Jet s equity partner Etihad Airways, US-based PE firms TPG and Indigo Partners, and Think Equity Partner-Redcliffe Capital, Jet founder Naresh Goyal and other individuals.
An SBI spokesperson said the bid proposals are under scrutiny and will be shortlisted soon.
The proposed equity conversion by banks, if any, will be undertaken as a transitory mechanism to facilitate the bidding-cum-sale process, the spokesperson added.