These are tough times for Jet Airways. The cash-strapped airline is in desperate need for emergency funds to keep flying. However, it has so far failed to secure the much-needed funds from the lenders, even as the search for a buyer pushes ahead. With much of its fleet grounded due to non-payment of dues to lessors, Jet Airways has now cancelled international flights till Thursday.
According to Vinay Dube, Jet Airways chief executive officer, the board is set to meet on Tuesday, where all the relevant matters including that of funding will be discussed and the management will look for guidance on the next steps.
“We have been working with the lenders to secure interim funding for our operations. The interim funding has not been forthcoming thus far, and as a result, we have extended cancellation of international operations until April 18,” Dube said in an email.
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 a part of the resolution plan, lenders were to inject Rs 1,500 crore into Jet Airways immediately via appropriate debt instruments.
Last week, Goyal, who held 51 per cent stake in the airline, pledged 26 per cent of it as a security for loans. However, so far, less than Rs 350 crore has been disbursed by the banks. Unless the funding is secured, Jet Airways may not be able to fly for long.
The developments come even as the process to find a suitable investor in Jet Airways is ongoing. According to some reports, at least four entities, including Abu Dhabi-based Etihad and National Investment and Infrastructure Fund (NIIF), have expressed interest in picking up a stake in Jet Airways. Goyal, as well as a few private equity players, too may have expressed their interest in Jet Airways, although whether banks will be keen on Goyal entering the fray again is uncertain.
“Etihad does not comment on rumour or speculation,” an Etihad spokesperson told THE WEEK. The airline had held 24 per cent stake in Jet Airways.
State Bank of India, which is leading the stake sale process for banks, said that the bid process being run by SBI Caps was being vetted by a legal team and the prospective bidders would be short-listed soon. The proposed equity conversion by banks would be undertaken as a transitory mechanism to facilitate the sale process, it further said.
Jet Airways had debt of Rs 7,654 crore as of December 31, 2018, and has failed to pay its lessors as well as its employees. The employees had also called upon on Prime Minister Narendra Modi to save the airline.
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Jet Airways investors too are nervous. The stock tumbled 2.4 per cent to Rs 255.60 on Tuesday as concerns rose over the survival of the airline without funds.
With much of its fleet grounded, a significant number of its slots are unused, which could be up for grabs for other airlines, Ansuman Deb of ICICI Securities said in a report recently.
Jet Airways had a higher slot share at key airports like Mumbai and Delhi, which would be of key interest to investors. Jet Airways was once the country’s second-largest carrier in terms of market share, and had a fleet of around 120 planes. But its troubles have only boosted its rivals, with low-cost carrier Indigo’s capacity share already touching 45 per cent, according to a research report.
