Troubles continue to mount for cash-strapped Jet Airways, with around 13 aircraft now grounded in the last two days due to non-payment of dues to lessors. This comes at a time lenders continue to engage with Chairman Naresh Goyal and the other major shareholder Etihad over a debt restructuring plan.
On Wednesday, the full service airline had said seven of its aircraft had been grounded due to non-payment of dues outstanding to its lessors. On Thursday, six more aircraft have been grounded, taking the number of aircraft grounded in February to 19.
As more aircraft have been grounded, multiple flights have had to be cancelled. Angry customers have taken to Twitter to vent their disappointment. A few have said they have tried reaching out to the call centre to know the status of their booking, but there was no response despite holding on for as much as 40 minutes.
The airline has said it is experiencing very high call volumes and is requesting customers to reach out to travel agents for any assistance. It also has an option on the web where one can fill up a enquiry form. “The company is making all efforts to minimise disruption to its network and is proactively informing and re-accomodating its affected guests,” Jet Airways said.
The airline is also actively engaged with all its aircraft lessors, it added.
Rising operating costs and low fares have hit the bottomlines of India’s airlines. For the nine months ended December 31, 2018, Jet Airways reported a net loss of Rs 3,208 crore on a revenue of Rs 18,320 crore.
The airline had a gross debt of Rs 7,654 crore or $1.09 billion as of December 31, 2018. Apart from delaying payments to debtors, Jet Airways has been struggling to pay salaries on time, too.
On February 14, the board of directors of Jet approved a bank-led provisional resolution plan (BLPRP), which includes fresh equity infusion, debt restructuring and sale and leaseback of planes. The BLPRP estimates a funding gap of Rs 8,500 crore, including proposed repayment of aircraft debt of Rs 1,700 crore. Currently, Goyal holds 51 per cent stake in the airline, while the Gulf airline Etihad holds 24 per cent.
also read
- Supreme Court quashes JKC's plea challenging sale of Jet Airways' 3 Boeing 777s
- 'Lost hope, it's better to die in jail': Jet Airways founder Naresh Goyal gets emotional in court
- ED attaches properties worth Rs 538 crore of Jet Airways founder Naresh Goyal, others
- ED arrests Jet Airways founder Naresh Goyal in bank fraud case
If the debt resolution plan goes through, then lenders will become largest shareholders in Jet Airways, after converting debt to equity. Under RBI regulations, lenders can convert debt into equity at Rs 1 when the book value per share of a company is negative.
The lenders have held hectic parleys with Goyal and Etihad over the last few days to resolve the issues. Goyal reportedly has agreed to step down as the chairman, although he is still likely to continue to play some role in the airline. There has not been any official communication from the airline on this yet.
“Jet Airways, its principal shareholders, including Etihad Airways, and key financial stakeholders are working towards the finalisation and subsequent implementation of the BLPRP, to ensure that the carrier emerges as a financially strong and resilient airline,” Goyal and Tony Douglas, CEO of Etihad said in a joint statement issued earlier this week.
The two expressed confidence that the airline would reemerge as a viable and robust airline once the BLPRP was implemented. However, so far, neither Goyal nor Etihad have committed to any additional funding into the airline.
Jet Airways shares were up 4.7 per cent to Rs 233.35 on Friday following the reports that Goyal had agreed to step down. The stock has crashed almost 70 per cent over the past one year.
