Although Jet Airways' promoter Naresh Goyal released a statement on Wednesday saying he has "signed on the dotted line as required to ensure release of the much needed funds committed by the lenders", the beleaguered airline's woes are far from over. Battling crises on multiple fronts, from grounded planes to disgruntled and unpaid employees threatening to go on strike, it may be racing against the clock to stay afloat.
"Jet Airways won't be able to operate beyond April if it doesn't get the entire promised debt funding of Rs 1,500 crore from its lenders in a week, its top management has estimated internally," sources in the know told The Economic Times.
But the recent Supreme Court ruling that struck down the RBI's February 12 circular - outlining a revised framework for resolution of stressed assets - may throw a spanner in the works. The cash-starved Jet Airways on Wednesday deferred payment of March salaries citing "complexities" in the finalisation of the debt-recast plan, under which the SBI-led consortium of lenders took over the reins of the airline last month.
The resolution plan involves converting the airline's debt into equity - a 50.1% stake - for a notional value of Re 1 per share, as per the RBI's circular, which has now been declared unconstitutional and ultra vires (acting or done beyond one's legal power or authority). Hence, the promised emergency infusion from the lenders to meet operating costs is now held up on "technical" grounds.
Status on salary
Jet Airways chief people officer Rahul Taneja said in a communication to staff yesterday that the airline is making every "possible effort" to remit salaries at the earliest and will provide "an update on the status of the pay-out by April 9, 2019". The airline's management has reportedly already met lenders seeking clarity on the future of the resolution plan but no clarity or assurance has been forthcoming.
Meanwhile, the airline's pilots' body, National Aviator's Guild (NAG), has deferred its no-flying call to April 15. The body, which claims to represent around 1,100 of the 1,600 Jet Airways pilots, had announced earlier that its members will not fly from April 1, unless their salary dues were cleared.
"The management has shown us a positive intent by transferring our (December) salary and we thought we should give them at least a couple of weeks to settle down and form the interim board and solve our issues which they have already spoken about earlier," NAG president Karan Chopra said on Sunday. Incidentally, it was on the NAG's pushing that the SBI-led consortium had agreed to infuse interim funding of Rs 1,500 crore.
Chopra had added that the total payout of salary for pilots, engineers and general managers and above-level executives would be in the range of Rs 320-350 crore for the period between January and March this year.
"Jet received loan funding of Rs 180-200 crore last weekend, all of which has already been exhausted in paying salaries for December and clearing jet fuel dues," a source said. This means that there was nothing left to pay its lessors. On Tuesday, the airline disclosed that it has grounded 15 more aircraft due to non-payment of lease rentals. In addition, several more of its planes are reportedly non-operational since its ongoing cash-crunch is making it difficult to finance spare parts and engines.
In the bargain, India's second-biggest airline until January is currently the smallest. And until more aircraft start flying there won't be any cash generation, which is bad news for an airline burdened with a debt of around Rs 8,200 crore
Civil Aviation Secretary Pradeep Singh Kharola said on Wednesday evening that Jet Airways is operating 28 planes, including 15 aircraft in the domestic routes. Back in December, the airline had boasted a 124-strong fleet. Speaking on the sidelines of an aviation conference earlier in the day, he had said that the airline's ability to fly international operations needs to be "examined". That's because under India's new aviation policy of 2016, domestic airlines can fly overseas provided they deploy 20 planes or 20% of their total capacity for domestic operations. Jet is reportedly likely to seek approval from the regulator to continue international operations even though it flies fewer than 15 planes locally.
If the DGCA decides to withdraw Jet Airways' international flying rights, those who have booked international holidays over the upcoming school summer break may suffer. Ajay Awtane, founder of Live From A Lounge, a popular desi frequent-traveller website, told Firstpost that after Air India's direct flights from India to the USA, Jet Airways is the only other carrier that can fly to long-haul destinations at the moment, and provides an Indian option to the passengers. So, there are no other alternatives if the latter's international operations are asked to close down on short notice.
The report added that the operational revival plan submitted by the airline to the Directorate General of Civil Aviation earlier this month, claiming it would have 75% of its fleet up by the end of April, had been rejected as too ambitious. So Jet Airways has now submitted a fresh plan proposing to have 35 planes up shortly, and is accepting bookings based on this curtailed schedule.
Earlier this week, the Indian aviation watchdog approved the summer schedule of flights of Jet Airways only till April 25, while that for all other domestic airlines such as Vistara, IndiGo, Air India and GoAir have been approved till October 26.
The big question now is whether the new management of the struggling airline can bag new investors, and how soon. The buzz is that state-run National Investment and Infrastructure Fund, TPG Capital and Delta Air Lines, among others, have been approached. Will any of them bite in time to save the airline?
With PTI inputs