Jet Airways said today it might stop operations from tonight. It said that there were no ‘signs of emergency fund infusion’ in Jet Airways by lenders who didn’t respond to the Jet CEO’s letter.
Teetering for over four months due to cash-drought, Jet Airways, flying for over 25 years, Wednesday said its last flight will takeoff later this night, after its lenders refused to offer a Rs 400-crore lifeline.
"With immediate effect, we are compelled to cancel all our international and domestic flights. The last flight will operate today," Jet Airways informed the exchanges.
The airline said the decision follows the lenders refusing to offer a lifeline.
"Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going... and has decided to go ahead with temporary suspension of operations," the airline said.
Accordingly, the last flight will leave the Amritsar airport at 2230 hrs for New Delhi as per its flight schedule.
After a board meeting Tuesday, the management had authorised chief executive Vinay Dube to make one last appeal to the lenders for an emergency Rs 400 crore funding, and if not the demand is not met, take a final call on the future of the airline Wednesday.
Late last night, Jet Airways was informed by State Bank of India, on behalf of the consortium of lenders, that they were unable to consider its request for critical interim funding, the airline said in the statement. P
1. Jet Airways likely to be grounded
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With the lenders rejecting an lifeline of Rs 400 crore Wednesday Jet Airways, which has been on a wing and prayer since January, is left with no other option but to ground operations at least temporarily.
Since the March 25 resolution to infuse Rs 1,500 crore into the airline is yet to fructify, the once leading airline has been defaulting on payments, forcing its lessors to retake almost all its planes and was operating just about six planes as of Tuesday.
An official announcement of grounding of operations is expected anytime now as the Jet Airways board had Tuesday authorised chief executive Vinay Dube to make one last appeal to the SBI-led consortium to get a life-line of Rs 400 crore Wednesday, before taking a final call on the future.
Jet will be the seventh airline to go down since May 2014 and the 13th one after East West was shuttered.
2. Jet Airways request rejected
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During the past five years airlines like Air Pegasus, Air Costa, Air Carnival, Air Deccan, Air Odisha and Zoom Air have all gone belly up even as the government boasts of double-digits growth for more than four years in tow.
"The Jet Airways management's request for Rs 400 crore emergency funds has been rejected," banking sources told PTI.
A source at the Jet Airways also said the airline was likely to shutter soon as the banks have not extended it the required financial support.
"The airline has failed to garner the funds it was desperately looking for to continue operations," he said.
The airline is currently operating only five planes from 123 aircraft in the fleet till last December.
According to sources, the government is maintaining distance from the Jet affairs citing the matter is a commercial decision of banks.
3. Vijay Mallya joins the debate
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Embattled liquor tycoon Vijay Mallya on Wednesday took to social media once again, this time to express his solidarity with Jet Airways founder Naresh Goyal and repeat his own offer to repay all the money he owes to India's public sector banks.
The 63-year-old, fighting his extradition to India on charges of fraud and money laundering amounting to an alleged Rs 9,000 crores, claims private airlines were discriminated against by the Indian government, which bailed out state-owned Air India but did not assist his own Kingfisher Airlines and now Jet Airways.
Even though Jet was a major competitor to Kingfisher at the time I feel sorry to see such a large private airline on the brink of failure when government used 35K crores (Rs 35,000 crores) of public funds to bail out Air India. Just being a PSU is no excuse for discrimination, Mallya wrote in his latest intervention on Twitter.
He added: I invested hugely into Kingfisher which rapidly grew to become India's largest and most awarded airline. True, Kingfisher borrowed from PSU Banks as well. I have offered to pay back 100 per cent but am being criminally charged instead. Airline Karma? The former Kingfisher Airlines boss took yet another swipe at the media as well, claiming every offer he makes to pay back funds owed by his now-defunct Kingfisher Airlines to PSU banks resulted in reports that claim he is spooked, terrified etc of being extradited from the UK back to India.
I am willing to pay either way whether I am in London or in an Indian Jail. Why don't Banks take the money I offered first, he questioned.
4. Vijay Mallya weighs in
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On a more personal note directed at Jet Airways founder Goyal and his wife Anita, the UB Group chief expressed his sympathy for the troubles being faced by the cash-strapped private airline, which has been forced to cancel a string of flights amid a mounting crisis.
"Even though we were fierce competitors, my sympathies go out to Naresh and Anita Goyal who built Jet Airways that India should be extremely proud of. Fine Airline providing vital connectivity and class service. Sad that so many Airlines have bitten the dust in India. Why," Mallya questioned.
Mallya remains on bail as he awaits an oral hearing to be listed by the UK High Court for his appeal against his extradition ordered by Westminster Magistrates' Court in London last December and then signed off by UK home secretary Sajid Javid in February.
A first level of that written appeal has already been rejected by the High Court, where it will now be considered during a brief hearing to determine any grounds to grant permission for Mallya's appeal to proceed to appeal substantive hearing.
The businessman faces a series of unrelated legal battles in the UK courts, including a USD 40-million claim brought by drinks giant Diageo and an attempt by Swiss bank UBS to repossess his posh London home overlooking Regent's Park.
Meanwhile, a State Bank of India (SBI) led consortium of 13 Indian banks continue their attempt to enforce a worldwide freezing order upheld by the UK High Court in May last year through a number of follow up court orders to try and recoup some of the GBP 1.145 billion owed to them.
5. Read Jet Airways full statement
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Late last night we were informed by SBI, on behalf of the consortium of Indian lenders, that they are unable to consider our request for interim funding of INR 983 crores. Because no emergency funding from the lenders or any other source of funding is forthcoming, it will not be possible for the Company to pay for fuel or other critical services to keep the operations going. Consequently, with immediate effect we are compelled to cancel all international flights as well as our domestic flights.
This decision has been taken after painstaking evaluation of all alternatives and after receiving guidance and advice on the same from the Board of Directors of Jet
Airways. We have also informed the DGCA, and the Ministries of Civil Aviation and Finance and other relevant government institutions, of this course of action.
A decision like this is never easy to make, but without the interim funding, which we have been repeatedly requesting for, we are simply unable to conduct flight operations in a manner that delivers to the very reasonable expectations of our guests, employees. partners and service providers.
“Following the announcement that Jet Airways has suspended operations, Etihad continues to re-accommodate and support affected guests. Our teams are assisting guests with their travel arrangements and rebooking those affected onto the next available flights.
We continue to work with Jet management, lenders and key stakeholders in the context of the lender-managed effort to restructure the company.”
