Curtains down for Jet Airways, resumption of services now depends on resolution process

By: and |
Published: April 18, 2019 2:59:38 AM

Confirming the receipt of information about Jet stopping all operations, the civil aviation ministry said in a series of tweets that the bank-led resolution process is still underway and expected to end by May 10.

Curtains down for Jet Airways, resumption of services now depends on resolution process (File photo)Curtains down for Jet Airways, resumption of services now depends on resolution process (File photo)

Failing to get an emergency funding of Rs 400 crore from the lenders, cash-strapped Jet Airways suspended its total operations temporarily from Wednesday night.

The full-service carrier, which started operations over 25 years ago, said in a statement that flight operations cannot be continued further without critical interim funding by the banks’ consortium headed by SBI. “Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going. Consequently, with immediate effect, Jet Airways is compelled to cancel all its international and domestic flights,” Jet said.

The Amritsar-Mumbai flight via Delhi was its last flight before bringing operations to halt on Wednesday night.

Confirming the receipt of information about Jet stopping all operations, the civil aviation ministry said in a series of tweets that the bank-led resolution process is still underway and expected to end by May 10.

READ ALSO | Jet Airways last flight at 10:30 pm; ailing airline to shut down operations tonight

“During this time, the ministry will support the resolution process within the existing legal and regulatory framework”. It said that DGCA and other regulators are monitoring the situation carefully to ensure that all existing rules regarding refunds, cancellations, and alternate bookings are followed strictly.

“We are assisting airlines and airports to bring in capacity rapidly to ensure that fares remain stable and competitive,” the ministry said, adding that the civil aviation secretary will be convening a meeting with airport operators and airlines on Thursday to coordinate and address emerging issues on capacity, slots and passenger convenience.

As reported earlier, on Tuesday, Jet’s chief executive officer Vinay Dube had sought an urgent fund infusion of Rs 400 crore to prevent temporary suspension of all operations.

The airline had been carrying out a curtailed operations for the last several weeks and last week suspended its international operations due to cash crunch. By Tuesday, its once 119-aircraft strong fleet had come down to just 5, underlining that without any immediate fund infusion the airline will not be able to continue for more than a day.

Now, the restarting of operations will totally depend on the success of the bank-led resolution plan which is underway. SBI Caps, which is carrying out the sale transaction, on Wednesday issued bid documents to four shortlisted bidders — Jet’s equity partner Etihad Airways, India’s sovereign wealth fun NIIF, US-based TPG Capital and Indigo Partners. The lenders are offering to sell 31.2-75% stake in the beleaguered carrier.

Jet, which made losses of Rs 3,208 crore in the nine months to December, 2018 had a gross debt over Rs 7,654 crore in December 2018.

Trouble at the airline began last August when it asked employees to take up to 25% salary cut to save costs. Jet has not paid employees March salaries; pilots have not been paid since January while dues to other employees — aircraft maintenance engineers and senior management, also remain unpaid. The airline has not paid its vendors, lessors and also has dues to oil marketing companies.

Under the banks-led debt resolution plan approved by the Jet board on March 25, lenders were to acquire an equity stake in the airline and infuse Rs 1,500-crore. The carrier’s founder and promoter Naresh Goyal and his wife Anita Goyal, accordingly stepped down from the board. However, the lenders did not infuse the funds as they demanded more collateral.

Jet also said on Wednesday that the value of JPMiles accumulated by passengers would remain intact. JPMiles is a customer loyalty programme of Jet managed by Jet Privilege.

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