Jet Airways fate hangs in balance over funding delays, depleting sales

Companies News

Jet Airways' fate hangs in balance with fast depleting sales and non-committal stance by Etihad Airways on fresh infusion of funds.

On Monday, the airline's founder chairman Naresh Goyal wrote to staff seeking more time to finalise a resolution plan given its complexities. Goyal's email said he is still in talks with lenders and Etihad, but aviation sources indicated that he is looking for a new investor to keep the company afloat.

On Tuesday morning, civil aviation minister Suresh Prabhu directed the department secretary to hold an emergency meeting on grounding of Jet's flights and asked for a status report.

The delay in fund infusion is leading to massive cancellations and employees are increasingly losing confidence in management commitments. Travel agents too are becoming apprehensive about the future of the airline and a few corporate houses have asked their employees to follow discretion while booking Jet tickets.Jet insiders say its truncated schedule of 200 flights each day is not sustainable to meet expenses.

Amit Kelkar, vice president of Jet Aircraft Maintenance Engineers Welfare Association, wrote to the civil aviation ministry on Tuesday, stating that with repeated payment defaults, members had lost confidence in the management. The letter also warned of safety risks, as engineers were not getting paid.

The National Aviators Guild which represents pilots is meeting this afternoon to decide its future course of action. Earlier this month, the union had written to labour minister Santosh Gangwar about pay delays.


 A section of employees however is still hopeful of a positive outcome over the course of the next few days...Read More

Naresh Goyal seeks Rs 750 crore from Etihad to keep Jet Airways flying

International News

Jet Airways Founder-Chairman Naresh Goyal, in a communication to Etihad group Chief Executive Officer Tony Douglas, has said the airline is in a “precarious” position, with more than 50 planes grounded. Goyal has sought Rs 750 crore immediately from Etihad, while raising concerns over “increasing arrears of vendors and salaries’’ at Jet.

This coincides with Jet Airways informing the exchanges that it has defaulted on part payment of a foreign loan due to liquidity constraints. The part payment was due on external commercial borrowing on March 11.

The amount of the default could not be ascertained, but reports suggest that there was a $150-million loan repayment due by March end.

It is learnt that under the proposed bank-led resolution plan to rescue Jet, lenders will infuse Rs 750 crore and Etihad will have to procure funding for the company either itself or through an offshore or on shore lender for a matching amount as the lenders. This is subject to board approval, regulatory clearances, and a valid creation of a pledge over not less than 34.9 per cent of the total issued equity capital of Jet Privilege Pvt Ltd (JPPL) in favour of lenders. The MoU hinges on the completion of an interim financing plan of Rs 4,000 crore, which is crucial for the airline’s survival, a source in the know said.

Even as Jet needs immediate funding to keep flying, the Etihad board met on Monday to take up the bank-led resolution plan for discussion.


 “As a minority shareholder, Etihad continues to work constructively with the Jet Airways board, management team and other stakeholders,’’ the company said in a statement after the meeting. A nod at the Etihad board meeting is critical for Jet’s rescue...Read More