Jet Airways stares at more aircraft groundings as fundraising gets tougher

The crisis-ridden Jet Airways, which grounded four more aircraft over the weekend due to non-payment of dues to lessors, faces more trouble ahead.

Insiders claim that the number of grounded aircraft is expected to increase this month, apart from the planes grounded for scheduled and non-scheduled maintenance work.

With the latest spate of groundings, about 23 planes, or around 20% of the Jet Airways fleet is now out of operations.

The Jet Airways website claims that the airline has 119 aircraft under its fleet at present, including those dry-leased to other airlines. However, fleet tracking websites, including airfleets.net, put the number of active aircraft to be 106. "The numbers would go higher in the coming days unless there is immediate infusion of funds," said an airline insider.

Adding to the trouble, a Securities and Exchange Board of India (Sebi) order restricting open offer exemption may make it difficult for Jet to raise funds.

Though Jet Airways officials said that the airline is making all efforts to minimise disruption to its network and re-accommodating its affected guests, the experts claim it would get tougher for the airline in coming days. The reason being that the rival airlines, which as per the industry practice accommodate passengers from cancelled flights, are now showing apprehensions due to poor financial condition of Jet Airways. Madhu Mathen, GM (marketing) at Air India, in letter to the concerned department said, " With immediate effect and till further notice, Jet Airways (India) Limited and JetLite Limited documents (including FIM and endorsed/ involuntary rerouted/ re-booked/ exchanged/ re-issued documents) are not be accepted for travel on Air India flight." flight interruption manifest (FIM), which is an agreement between two airlines, allows shifting of passengers in case of overbooking at a pre-agreed rate. The carriers can also allowed to accommodate the passengers in case of a cancelled flight. Likewise, though Jet Airways and rival full-service carrier Vistara do not have FIM, an interline ticketing facility between them has been terminated.

Normally, the payment with regard to such payment is to be made within a period of 15 days in case of full service carriers and immediately in case of low-cost carriers.

Further, a ruling by market regulator Sebi on Friday made it tougher for Jet Airways to raise funds. In January, Etihad Airways had offered to increase its stake in the airline up from 24%, but sought exemption from Sebi on open offer and preference pricing. As per the regulatory mandate, a company has to make an open offer in case its stakeholding in a listed company goes beyond a certain threshold. However, Sebi in an order on Friday made it clear that the exemption from making an open offer in case of acquistion of over 26% in a listed company will be allowed only to banks, lenders and financial institutions. Further, Sebi has also removed the "competent authority" clause for exemption from an open offer. Etihad Airways was banking on exemption based on the reference from the civil aviation ministry and Directorate General of Civil Aviation.

Jet Airways, along with its stakeholders, has worked out a resolution plan that will see the lenders holding 51% stake in the airline as part of the conversion of debt into equity in the first stage of the restructuring exercise. In the second stage, the lenders' stake will come down to about 30% after the right issue of Rs 3,000 crore, which will see Etihad's stake going up to 40% and Naresh Goyal's shareholding falling to 22%. The airline on February 21 had discussed and passed resolutions allowing banks to acquire a majority stake.

Jet Airways has been seeking funds from several investors, including Tata Sons, private equity investors, Etihad Airways, to make a turnaround.