Since the beginning of this month, cash-strapped Jet Airways has grounded six aircraft "due to non-payment of amounts outstanding to lessors under their respective lease agreements". Yesterday, in a regulatory filing, India's second-largest airline said that it had grounded two more planes - taking the total to 25 - but was "making all efforts to minimise disruption to its network due to the above and is proactively informing and re-accommodating its affected guests".
With this development, around 20% of the aircraft in Jet Airways' fleet are now out of operations. The planes on the ground reportedly include the newly-introduced Boeing 737 Max, Boeing 737 NG and Airbus A330 planes. A senior Directorate General of Civil Aviation (DGCA) official told The Financial Express that cancellations by the airline have nearly doubled to 200 per day from 100-odd flights in December. That's approximately a third of the daily schedule of 600 flights.
According to the monthly passenger data, Jet Airways' domestic passenger count was down 9% year-on-year during January while its market fell to 11.9% - the lowest in at least five years - behind national carrier Air India's 12.2%.
The source added that at least seven more aircraft, including ATR turboprop jets, have been taken off the fleet for lack of spares but "there has been no notice for de-registration (of aircraft) so far".
Meanwhile, Jet Airways, burdened with a debt of around Rs 8,200 crore currently, has been scrambling to raise funds for operations. Shareholders of the beleaguered airline approved proposal for conversion of its debt into shares at the recent extraordinary general meeting (EGM), during which Deputy Chief Executive Officer Amit Agarwal announced that Jet has been talking to various investors for capital infusion.
However, while the buzz earlier was that its strategic partner Etihad, which currently owns a 24% stake in the domestic carrier, would pump in around Rs 1,400 crore, things seem to have taken a U-turn. According to sources, Abu Dhabi-based carrier may be unwilling to infuse any funds in the interim - not till the bank-led resolution plan (BLRP), which is being piloted by State Bank of India, is finalised and approved. According to banking sources, Etihad had abstained from voting on various proposals during the EGM.
So, with the bailout plan likely to take a while to get finalised and implemented, Jet Airways urgently needs funds in the interim to pay pilots, vendors and aircraft leasing firms and avoid more planes getting grounded. Hence, the airline has now pledged fixed deposits worth Rs 1,500 crore with various banks to borrow Rs 225 crore from State Bank of India (SBI), Mint reported, adding that it could avail more funds from SBI with these FDs as security.
The airline also has to move quickly to get its house in order with large repayments of Rs 2,444.5 crore due in FY20 and Rs 2,167.9 crore in FY21. Moreover, Jet Airways had defaulted in servicing its loan obligations on December 31, 2018, and the 90-day window before its loans are dubbed non-performing assets (NPA) ends on March 31.
With PTI inputs
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today