Jet blinked after investor threat

It could have played like the Mario Puzo bestseller The Godfather, with Don Vito Corleone calling up the ‘five families’ of New York to end the war between them, after the death of his son Sonny.

The war was between the pilots of National Aviators Guild (NAG) and the management of Jet Airways (India) Ltd had entered the fifth day when the calls began to come.

The voices on the other side were very persuasive, calling the airline management to strike a truce. These foreign investors threatened to pull out of a “multi-hundred crore” investment proposal through a Singapore-based company.

To boot, the US Exim Bank also threatened to cancel the 85% guarantee for the airline’s Boeings, said a source who was present at meetings between the pilots and the management.

“The Jet bosses got a call from Singapore-based investors who said if the airline did not dissolve the union and end the strike soon, they would back out of their investment plans,” thesource said.

But a senior Jet Airways official said --- on the condition of anonymity --- denied the airline’s top brass got such calls from investors or the US Exim.

“Investors had full faith that Jet would solve the crisis in an amicable manner,” the official said.

The US Exim Bank had extended Jet a guarantee of around $1.3 billion to buy six wide-bodied Boeing 777s, orders for which were placed in 2007-08, and 21 Boeing 737 aircraft.

“Saroj Datta (Jet Airways executive director) eventually discussed this situation with the National Aviators’ Guild, explaining the predicament of the airline when seeking to dissolve the guild and forming a joint committee with the management and the pilots, after investors started asking questions about the state of affairs,” the source said.

Jet Airways had to scrap over 1,000 flights following a five-day strike (from September 8) by some 400 pilots who walked off their jobs, protesting the dismissals of four colleagues.

The strike led to daily revenue losses of about $2.2 million, Jet said on Sunday.
“This is what the airline was worried would happen — if the employees formed a union, it would scare away present and future investors,” said an aviation analyst, who did not wish to speak.

Though many private airlines have unions they do not interfere with the investment decisions of the company,  the analyst said.