Cash-strapped Jet Airways forced to ground 4 planes over rising dues; flights hit
Saurabh Sinha | TNN | Updated: Jan 29, 2019, 17:03 ISTHighlights
- Some Boeing 737s — the mainstay of Jet’s operations — were grounded at Delhi, Mumbai, Bengaluru and Chennai airports on Monday
- The airline has been in talks with various players over the issue of payment delay but some lessors have now started the process of grounding planes over default
- Sources say the situation could worsen quickly unless fund infusion takes place
NEW DELHI: Lessors have started grounding Jet Airways’ aircraft over mounting dues, affecting the cash-strapped airline’s schedule. Almost four to five planes were reportedly grounded at airports across India on Monday night itself due to which about 20 flights have been cancelled, say sources.
On Monday night, some Boeing 737s — the mainstay of Jet’s operations — were reportedly grounded at Delhi, Mumbai, Bengaluru and Chennai airports. “One plane was grounded at each of these places. Another plane has been grounded for some time as the lessor has started the repossession process,” said a source.
The airline has been in talks with various players over the issue of payment delay but some lessors have now started the process of grounding planes over default.
Jet's website says it has 123 aircraft in its fleet. However, due to mounting dues to lessors and maintenance organisations as well as a cash crunch to buy spares, a number of these planes have now been grounded. The airline is yet to reveal how many planes are operational.
Sources say the situation could worsen quickly unless fund infusion happens. It has been known for a while now that Etihad, which currently has 24% stake in Jet, is going to pump in money and increase its stake. Lender banks could convert a part of their Rs 8,200-crore debt into equity and pick up some new shares. But all this needs to happen quickly before Jet’s schedule of flights starts getting disrupted due to aircraft grounding.
Jet management gave an indication of these changes in a BSE filing on Monday. The notice said an EGM has been called on February 21 to seek approval for things like increasing authorised share capital 11-fold to Rs 2,200 from current Rs 200 crore; for lender banks appointing a director on the airline’s board and converting loan to equity.
After debt restructuring and Etihad putting funds, lender banks could hold close to 30% stake in Jet; Etihad’s could go over 40% and Naresh Goyal’s stake could fall below 20%.
“We have been hearing about fund infusion by Etihad and debt restructuring for a long time. Whatever steps are needed to ensure Jet does not go Kingfisher way should be taken without any further delay. Things are going from bad to worse, both financially for us, and operationally for the airline due to aircraft being repossessed by unpaid lessors over dues,” said a Jet employee.
On Monday night, some Boeing 737s — the mainstay of Jet’s operations — were reportedly grounded at Delhi, Mumbai, Bengaluru and Chennai airports. “One plane was grounded at each of these places. Another plane has been grounded for some time as the lessor has started the repossession process,” said a source.
The airline has been in talks with various players over the issue of payment delay but some lessors have now started the process of grounding planes over default.
Jet's website says it has 123 aircraft in its fleet. However, due to mounting dues to lessors and maintenance organisations as well as a cash crunch to buy spares, a number of these planes have now been grounded. The airline is yet to reveal how many planes are operational.
Sources say the situation could worsen quickly unless fund infusion happens. It has been known for a while now that Etihad, which currently has 24% stake in Jet, is going to pump in money and increase its stake. Lender banks could convert a part of their Rs 8,200-crore debt into equity and pick up some new shares. But all this needs to happen quickly before Jet’s schedule of flights starts getting disrupted due to aircraft grounding.
Jet management gave an indication of these changes in a BSE filing on Monday. The notice said an EGM has been called on February 21 to seek approval for things like increasing authorised share capital 11-fold to Rs 2,200 from current Rs 200 crore; for lender banks appointing a director on the airline’s board and converting loan to equity.
After debt restructuring and Etihad putting funds, lender banks could hold close to 30% stake in Jet; Etihad’s could go over 40% and Naresh Goyal’s stake could fall below 20%.
“We have been hearing about fund infusion by Etihad and debt restructuring for a long time. Whatever steps are needed to ensure Jet does not go Kingfisher way should be taken without any further delay. Things are going from bad to worse, both financially for us, and operationally for the airline due to aircraft being repossessed by unpaid lessors over dues,” said a Jet employee.
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