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Jet Airways crisis: US Exim Bank to seize all Boeing 777 aircraft as lenders yet to release interim funds to ailing airline

Jet Airways is on the verge of a complete shutdown as distress calls to release interim funds for the cash-strapped airlines' survival is yet to be responded to by lenders. The US Exim Bank has recalled loan to the airline and may seize all its long-range wide-body Boeing aircraft, said media reports.

According to The Economic Times, US Exim Bank reportedly recalled all loans amounting to Rs 2,000 crore to Jet Airways taken to buy Boeing aircraft and may soon also take away the long-haul Boeing 777 aircraft that the crisis-hit airline owns.

“The bank can take all 10 Boeing 777 aircraft that the airline owns and that would mean that the airline would not have aircraft left to operate,” the report said quoting an airline executive, who did not want to be identified.

 Jet Airways crisis: US Exim Bank to seize all Boeing 777 aircraft as lenders yet to release interim funds to ailing airline

Representational image. Reuters.

As the crisis deepens, debt-laden Jet Airways on Tuesday sent a final distress call to lenders for immediate release of at least Rs 400 crore to avoid a complete shutdown by end of day, said a report by The Times of India.

The airline’s board, which met in Mumbai on Tuesday, empowered CEO Vinay Dube to take a final call on shutting operations after making a final effort with lenders to release emergency funds. Accordingly, Dube wrote to lenders to seek at least Rs 400 crore as interim funding, the report said.

While the meeting of the ailing airline's board in Mumba that went on for over three hours remained inconclusive, officials at the lenders and the government maintained that efforts are on to revive the carrier.

However, the carrier's pilots union NAG on Tuesday threatened to seek resolution under insolvency law as salary dues remained unpaid, reported PTI.

NAG's vice-president Aseem Vlianini said the Union might approach the National Company Law Tribunal (NCLT) for a resolution.

The Union, which has around 1,100 members, said the airline is only operating around 450 seats per day and that operations would have to be suspended if money does not come in.

The management has said that salaries are to be paid from the additional funding only, but SBI has said that salaries would not be part of the funds, according to Vlianini.

"I think SBI is not serious (about funding)," he said.

An airline source said the number of pilots have reduced to around 1,300 after about 400 pilots left in the wake of the crisis.

"Tuesday alone 23 pilots left the airline," the source claimed, adding that over 100-odd pilots have joined budget carrier IndiGo.

A government official said that approaching the NCLT for Jet Airways is not an option at this stage.

Jet Airways has sought emergency funds from banks and is currently operating only five planes, civil aviation secretary Pradeep Singh Kharola said on Tuesday, PTI reported. The cash-strapped airline has already suspended its international operations till 18 April.

Meanwhile, Punjab National Bank (PNB) managing director Sunil Mehta said on Tuesday that lenders to the cash-strapped Jet Airways are committed to reviving the air carrier but nothing has been finalised yet.

PNB is part of a consortium of 26 lenders, led by State Bank of India (SBI), which have exposure to Jet Airways' debt of over Rs 8,000 crore.

"Discussions for reviving the airline are underway and nothing has been finalised as of now. SBI Capital Markets is working on the revival package for Jet Airways," Mehta told reporters in New Delhi.

On Tuesday, Jet Airways founder Naresh Goyal decided not to bid for acquiring stake in the cash-strapped airline, said a PTI report.

Airline sources said Goyal, who had stepped down as chairman of the carrier last month, has withdrawn the bid for the airline.

Passengers face cancellations

According to Mint, more and more flyers, who booked tickets in the debt-laden Jet Airways, are facing flight cancellations affecting the credibility of the airline.

As more and more passengers cope with Jet Airways’ increasing frequency of flight cancellations, the question is that whether the passengers will in future opt for the airline again even if it makes a comeback from the crisis, said the report.

 

With PTI inputs

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Updated Date: Apr 17, 2019 14:00:07 IST

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