Cash-strapped Jet Airways says its liquidity position is critical and is in dialogue with banks to secure emergency funds to arrest its downward spiral.
The board of directors of the Mumbai-based airline met on Tuesday after it failed to get the funds from lenders on Monday. Jet's management apprised the board of the prevailing situation and seeked guidance on how to fly ahead. There were reports earlier in the day stating that the management also told the board that the airline may have to suspend operations temporarily with the critical funding not forthcoming.
Jet Airways did not confirm the reports, it said that it continued to await emergency liquidity support from the consortium of lenders led by State Bank of India.
"In view of the critical liquidity position of the company, its operations have been severely impacted. The company's leadership, in consultation with its board of directors, is engaged with lenders in connection with the said emergency funding request to arrest a further deterioration of its services and minimise inconvenience to its guests," it said late on Tuesday.
Jet Airways was until a few months ago the country's second largest airline in terms of market share and had a fleet of around 120 planes. However, with losses mounting, much of its fleet has been grounded as it hasn't been able to pay back its lessors. It is currently operating less than 10 aircraft. Salaries to the airline's employees have also been delayed.
Jet Airways promoter Naresh Goyal was forced to step down as the chairman of the board on March 25, as a part of the resolution plan led by banks, which gave lenders the control of the airline. As part of the resolution plan, lenders were to inject Rs 1,500 crore into Jet Airways immediately via appropriate debt instruments.
However, so far, less than Rs 350 crore has been disbursed by the banks. The airline has already cancelled international flights until Thursday and unless it gets the much needed funding, Jet Airways may not be able to fly for long.
Sunil Mehta, the managing director of Punjab National Bank said earlier in the day that discussions were ongoing on the revival plan.
"Lenders are committed to Jet Airways revival plan. SBI, SBI Caps have started working on the plan. Revival plan has not been finalised yet, discussion is still on," Mehta said.
The consortium of lenders had last week invited expression of interest from prospective investors. Abu Dhabi-based Etihad, which currently holds 24 per cent stake in Jet Airways, apart from a couple of private equity firms are learnt to have submitted their interest. Goyal also had reportedly sent his interest with the backing of two foreign investors. However, Goyal seems to have opted out of the bidding.
A temporary shutdown of the airline will be another headache for the lenders and will make the stake sale difficult. However, lenders may have also been slow in releasing emergency funds given the very little collateral that Jet can offer right now.
Jet, which had a debt of Rs 7,654 crore as of December 31, 2018, says it is in constant touch with the Directorate General of Civil Aviation and the Ministry of Civil Aviation with regards to its problems.
Jet Airways closed down 7.6 per cent at Rs 241.85 as panic gripped investors on reports that it may have to shut down temporarily. It hit a low of Rs 213.20 in the session.
