Finance Minister Arun Jaitley rubbished Congress allegations that the government is using public money to bail out the financially beleaguered airline Jet Airways by converting Rs 8,500 of debt into equity. Instead, the government is actually saving air passengers from having to shell out high airfares, he said in an interview to ET Now, adding that the government was not funding the promoters.
The government can’t let a major Indian brand Jet Airways to collapse, as with the fall of the airline all the investment will go, and the public sector banks along with other creditors would be the real losers.
On the other hand, the failing of Jet Airways would lead to a surge in airfares as the demand for aircraft would only expand in the coming years. “The second set of losers will be the consumers. One airline goes out of the system, there is a shortage of aircraft in the expanding market. The number of aircraft in the next ten years has to multiply five times. The demand and supply mismatch will take place and the fares will skyrocketing,” said Arun Jaitley.
Creditors led by the State Bank of India are trying to manage Jet Airways crisis and they have entered into a temporary set up with the existing promoters. They are willing to the bridge funding till the airline gets next promoter, Arun Jaitley added.
Naresh Goyal-promoted Jet Airways posted a net loss of Rs 587.77 crore for the third quarter of FY19. It had a debt of around Rs 7,299 crore at December-end. The creditors led by State Bank of India (SBI) said last week that they would pump in another Rs 1,500 crore into Jet Airways, to get the airline in shape for the final sale.
Cash-strapped Jet Airways have also not been able to pay salaries to its pilots, engineers and other senior management since August last year. The airline has been given an additional time of fifteen days till April 15 by the National Aviators Guild or NAG to clear its dues against the pending salaries of pilots, as per reports. Earlier, the pilot’s body had announced it would halt its flying operations from April 1 on non-payment of salaries. It’s only when the Jet Airways head Vinay Dube assured about the remission of salaries till December 2018, the NAG deferred its call to stop flying by a fortnight.