Jet Airways fast running out of fuel

Cancels int’l flights, grounds 10 planes; Goyal pledges 26% stake to PNB, may participate in bidding

Latest News
Naresh Goyal

With no clarity on interim fund infusion by the lenders, Jet Airways is now left with just 15 aircraft in its fleet. Ten more plane were grounded on Thursday due to non-payment of dues to lessors.

And with the airline not even having enough funds to refuel its planes, staying afloat will become more challenging for the airline, which until December had 119 aircraft in its fleet, said a source.

In the past eight days, Indian Oil Corporation (IOC), the supplier of jet fuel to the carrier, has thrice discontinued the supply.

These developments have led sector regulator Directorate General of Civil Aviation (DGCA) to seek a report from Jet Airways's management. As per the Indian aviation rules, an airline can fly internationally only if it has over 20 aircraft in its fleet.

According to civil aviation secretary Pradeep Singh Kharola, the government will review Jet's eligibility for international operations.

Jet has suspended its international operations until Friday morning or further notice. It also services to and from the East and Northeast regions.

Meanwhile, the lenders led by State Bank of India held a meeting on Thursday to discuss the issues regarding the infusion of emergency funding to the airline.

The airline's founder Naresh Goyal, pledged 26% of his stake as security to Punjab National Bank, according to a regulatory filing. The pledge was created on April 4 as "security for existing/new borrowings taken by Jet Airways."

On Wednesday, the bankers for the third time extended the timeline to submit the Expression of Interest (EoIs) to April 12 to give more players adequate time to participate.

Air Canada, AirAsia, Etihad Airways and Vistara have made enquiries on the bidding process for taking over up to 75% stake in the airline. Some of the investors want to come as a consortium to share the cost of taking over Jet.

Sources said that even Goyal is expected to make bidding on Friday. The binding bids have to be submitted by April 30, 2019.

The resolution plan to rescue the airline could not be signed after the Supreme Court struck down the February 12 circular of Reserve Bank of India (RBI). Bankers have planned the conversion of debt into equity at Re 1, as prescribed in this circular. The airline had also taken Board approval to convert 11.4 lakh shares at Re 1, and then infuse Rs 1,500 crore funding. But now the bankers are waiting for RBI to come up with a revised framework for the restructuring of the airline's debt.

Lenders had in February laid the ground for a new owner in Jet Airways after they managed to force founder-chairman Naresh Goyal and his wife Anita to resign from the Board of the airline and give an undertaking that they would be open to bringing down their stake from 51% to about 9%. Abu Dhabi-based Etihad agreed to exit from the ailing airline in stages.

The lenders' consortium then called for open bids to sell Jet Airways after obtaining written agreements from Goyal and Etihad.

Goyal, who currently owns 51% of Jet Airways, would have no voting rights if the resolution is approved. Etihad, whose holding is at 24%, according to the plan had to agree to sell its entire stake if it does not bring in new capital. In the first stage, Goyal will own 25.5% of Jet Airways, down from 51%, after conversion of debt into equity at Re 1 a unit. Etihad's stake will fall from 24% to 12% while banks will hold 50% of Jet Airways. Banks have kept a deadline of June 30 to offload the stake.

15 – Aircraft left in Jet’s fleet

20 – Planes a carrier needs to have to fly internationally, as per Indian aviation rules

119 – Jet’s fleet until December

Up to 75% – Stake the  lenders are offering in Jet

April 12 – The deadline to submit EoIs

April 30 – Deadline for submitting binding bids

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.

Live tv