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Jet Airways grounds 3 more planes over non-payment of dues; takes total to 28

If you factor in the number of planes unable to fly due to lack for spares, over 41% of Jet Airways' fleet is currently grounded.

twitter-logoBusinessToday.In | March 8, 2019 | Updated 10:52 IST
Jet Airways grounds 3 more planes over non-payment of dues; takes total to 28

Since the beginning of this month, cash-strapped Jet Airways has grounded nine 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 three more planes - taking the total to 28 - 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".

In addition, according to reports, several more of Jet Airways' planes are non-operational since its ongoing cash-crunch is making it difficult to finance spare parts and engines. According to a senior DGCA official, in total 49 of the airline's planes are currently grounded. "At this moment, they [Jet Airways] have 70 aircraft that are operational. At early December, they were operating 100 aircraft," the official told PTI yesterday. According to the airline's website, it boasts some 119 aircraft in its fleet, which means over 41% of its fleet is currently not flying.

The planes on the ground reportedly include the newly-introduced Boeing 737 Max, Boeing 737 NG and Airbus A330 planes. Describing the situation as "dynamic" - indicating more aircraft could be grounded in the near future - the aviation watchdog source claimed that the airline has been told that in case its flights are cancelled, "the passengers should be properly compensated" or offered alternative flights. "We should not be receiving any complaints regarding that," he explained, adding that Jet Airways has also been directed to "get their schedule approved in advance so that the passengers are informed" and the cancelled flights are removed from the official website.

Jet Airways has been grounding aircraft in tranches since February 7, but it has been maintaining that it is actively "engaged" with all its aircraft lessors and regularly provides them with updates on the efforts undertaken to improve its liquidity. "Aircraft lessors have been supportive of the Company's efforts in this regard," the airline added in regulatory filings.

According to latest DGCA 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 and behind national carrier Air India's 12.2%. Burdened with a debt of around Rs 8,200 crore, Jet Airways 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 per cent stake in the domestic carrier, would pump in around Rs 1,400 crore, things seem to have taken a U-turn. As per The Financial Express, 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. Etihad had reportedly 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 reportedly pledged fixed deposits worth Rs 1,500 crore with SBI to borrow Rs 225 crore earlier this week.

Significantly, Jet Airways 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.

Edited by Sushmita Choudhury Agarwal with PTI inputs

Also read: Naresh Goyal may step down from Jet Airways board, but on one condition

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