Jet Airways crisis: More groundings as bank funds not in yet

The Financial Express
April 04, 2019
Manisha Singhal and Arun Nayal

The airline is left with only 15 aircraft on domestic routes; its eligibility to fly international will be examined.

Jet, which had informed the civil aviation ministry on March 26 that there will be no further grounding and that it will bring 40 of its grounded aircraft back into service by April end, in fact on April 2 grounded 15 more aircraft.

With the interim bank funding of `1,500 crore still not flowing to Jet Airways, the crisis at the beleaguered airline has deepened to the extent that it is left with operating only 15 aircraft on the domestic routes as on Wednesday. This is the lowest number of aircraft being operated by any carrier on the domestic routes. Even newer airlines like AirAsia India and Vistara operate 20 and 22 aircraft, respectively, on domestic routes.

As per rules, an airline can only fly on international routes if it has 20 aircraft on domestic routes, but Jet may get a breather for sometime as this data is not monitored on a real-time basis.

However, civil aviation secretary Pradeep Singh Kharola sounded a warning by stating that Jet’s entitlement to fly international destinations needs to examined in the wake of fresh grounding. “The airline’s eligibility to fly internationally needs to be examined,” he Kharola told reporters on Wednesday.

Sources in the industry said that if the funding by the banks, which is still stuck, doesn’t flow in fast, more aircraft may get grounded due to non-payment of leasing dues to lessors, which will cripple its operations completely.

Jet, which had informed the civil aviation ministry on March 26 that there will be no further grounding and that it will bring 40 of its grounded aircraft back into service by April end, in fact on April 2 grounded 15 more aircraft.

There’s another crisis looming over the airline. Its 1,100-strong pilots’ union, which had earlier threatened to stop flying from April 1 unless their salary dues were not cleared, have extended their deadline to April 15.


However, here also the crisis will worsen if the bank funding does not materialise on time. On Wednesday, Jet informed all its employees that salaries for March are deferred. “In light of the current situation, please note that salaries for March 2019 will be deferred,” Rahul Taneja , chief people officer at Jet, wrote in a communication to all employees, adding that an update on the status of the pay-out will be given on April 9.

Its pilots and aircraft maintenance engineers have not been paid full salaries for over three months and the pilots conveyed to the management that if at least 50% of pending dues are not cleared they will resort to industrial action from April 14.

On April 1, the Directorate General of Civil Aviation approved a curtailed summer schedule for Jet as it has not been able to keep its commitment of maintaining its fleet size at 35 aircraft which it flew till last week.

On Wednesday, the DGCA said Jet is flying 28 aircraft, which includes international routes.

Jet Airways did not respond to a specific query by FE on how many aircraft it is flying and what is the total number of flights carried out by it. “As informed to the regulator (DGCA) the airline is operating a curtailed schedule with sufficient number of aircraft and is complaint with applicable guidelines,” the airline said in a statement issued to the media.

Though as per the lenders-led restructuring plan, Jet’s promoter-chairman Naresh Goyal and his wife Anita Goyal have stepped down from the board and lenders have taken charge with the majority 51% stake, the `1,500-crore immediate funding, which was was to come by way of this arrangement, is still to materialise.

Analysts said that the survival of the airline will depend on how fast the bank funding comes to the airline. Meanwhile, late evening on Wednesday, Goyal released a statement saying he has accepted all the conditions laid down by lenders to bring back the airline into shape.

“To this end, I have conscientiously taken some hard, personal decisions. In extending my fullest respectful cooperation to the consortium of Indian lenders, I have agreed to each and every term and condition laid down by them in a timely manner. I have given all facilitation for implementation of the ‘resolution plan’ and signed on the dotted line as required to ensure release of the much-needed funds committed by the lenders, in order to secure a sustainable future for Jet Airways. From the bottom of my heart, I wish every member of the vast Jet Airways family across our global network, a quick return to normalcy and unending success in the years ahead,” he said in the statement.

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