By Tanvi Mehta and Suvashree Choudhury
(Reuters) – Jet Airways plans to extend its suspension of international flights until Thursday having not received any interim funding from lenders, the company said in a letter to employees on Monday.
The airline, saddled with some $1.2 billion of bank debt, has been struggling after failing to receive a stop-gap loan of about $217 million from its lenders as part of a rescue deal agreed in late March.
In the staff letter, seen by Reuters, Chief Executive Vinay Dube said: “The interim funding has not been forthcoming thus far, and as a result of this we have extended cancellation of international operations through Thursday, April, 19.”
Dube said management would update the airline’s board on the matter at a meeting scheduled for Tuesday and would seek guidance on the next steps forward.
Jet, which also owes vast sums to lessors, suppliers, pilots and oil companies, has been losing planes in recent weeks as lessors scramble to de-register and take back their aircraft, even as Jet’s lenders have sought expressions of interest in the carrier from potential investors.
Lenders, led by the State Bank of India (SBI), want a new investor to buy a stake of up to 75 percent in Jet and initial expressions of interest were submitted last week.
A spokesman for SBI said in a statement late on Monday the bank was running the sale but gave little detail.
EXPRESSIONS OF INTEREST
Local media have reported that as many as six parties have submitted expressions of interest, though it is still far from clear if an acceptable bid will materialize.
“SBI is acting on behalf of the group of lenders,” the bank said. “Necessary support to facilitate the process is being extended by the banks in the consortium.”
India’s civil aviation regulator, the Directorate General of Civil Aviation, said on Monday that lessors had applied to de-register a dozen more aircraft being operated by Jet Airways.
Once a plane is de-registered, lessors are free to take it out of the country and lease it to other airlines. More than two dozen Jet-operated planes have been deregistered this month and the airline had already been forced to ground over two-thirds of its fleet by lessors due to unpaid dues.
On Friday, aviation secretary Pradeep Singh Kharola had said Jet had the money to operate only six or seven planes over the weekend and that lenders would have to decide how many planes it could fly through this week.. Jet now has about 44 flights, and only about seven operational aircraft, a senior pilot with the airline and a member of the pilots’ guild told Reuters on Monday.
The airline had more than 120 aircraft operating a year ago, but competition from low-cost carriers such as IndiGo and SpiceJet Ltd, together with high oil prices, hefty fuel taxes and a weak rupee have lately piled on pressure.
Jet’s employees marched last week to its headquarters in Mumbai to demand clarity on whether they would get paid soon and if their jobs will be secure over coming months.
Earlier on Monday, Jet’s pilots and engineers also gathered at its office in Mumbai demanding answers.
(Writing by Euan Rocha; Editing by David Holmes)