Jet Airways delays interest payment to debenture holder on financial constraints as rescue deal hits yet another hurdle

Cash-crunched Indian carrier Jet Airways said on Monday it will delay paying interest to its debenture holder, due 19 March, owing to financial constraints, said a Reuters report. Jet Airways has been saddled with debt of over Rs 8,000 crore due to tight competition and rising fuel costs, forcing the carrier to ground several of its aircraft. Jet Airways did not immediately respond to Reuters’ request for comment on payment-related details. The resolution plan for Jet Airways seems to have hit yet another hurdle as lenders reportedly told the crisis-hit airline’s strategic partner Etihad Airways that it should exit if it cannot accept the terms to revive the troubled airline, according to a report in The Economic Times. [caption id=“attachment_4883531” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The lenders reportedly told Etihad that it should exit so that a new investor could be brought in, said the report. Jet Airways has been looking at various ways to raise funds amid acute liquidity crunch that has forced it to ground aircraft, cancel flights in large numbers, shut down stations and delay salary payments to its pilots and engineers along with other senior staff. On 11 March, Jet Airways had defaulted on foreign loan repayment due to liquidity crunch, reported PTI. “… the part repayment of the external commercial borrowing availed by the company, for working capital purposes, falling due on 11 March, 2019, has been delayed owing to temporary liquidity constraints,” the airline said in a filing to stock exchanges. On 8 March, Jet Airways chairman Naresh Goyal wrote to Etihad Airways Group CEO Tony Douglas seeking urgent funding of Rs 750 crore. State-run Punjab National Bank (PNB) had said last week that any decision to provide emergency funds to cash-strapped Jet would be taken collectively by the lenders and not on a standalone basis. The assertion came in the backdrop of media reports that PNB had approved Rs 2,050 crore of emergency funding to Jet Airways, for which lenders were considering a resolution plan under Project Sashakt. In a filing to exchanges, Jet Airways had earlier clarified it has not received any fresh loan from PNB. On Friday, the pilots’ union of crisis-hit Jet Airways approached the government flagging concerns about salary arrears, saying that the situation is leading to extreme tension and frustration, according to a letter. The cash-strapped full service airline has been making delayed salary payment for the last few months. Against this backdrop, the National Aviator’s Guild (NAG) — a grouping of over 1,000 pilots of Jet Airways — has written to Labour Minister Santosh Gangwar. In the letter, dated 6 March, the grouping has raised concerns about persistent delay in salary payment of member pilots. “This situation is leading to extreme tension and frustration amongst our members, hardly an ideal situation for pilots in the cockpit… All pleas to the management in this regard have fallen on deaf ears,” the letter said. A Jet Airways spokesperson said it has not received any such communication. “The company remains committed to meet its salary obligations towards its employees and clearing all pending dues,” the spokesperson said. — With inputs from agencies