Troubles mount for debt-laden Jet Airways as nearly one-third of fleet likely to be grounded soon

  • Jet Airways may be forced to ground as many as 42 of its fleet of aircraft in a day or two

  • As many as 28 aircraft have already been grounded and in a day or two, another 14 planes will be grounded

  • SBI called an urgent meeting of lenders with Naresh Goyal and Etihad's CEO Tony Douglas

Trouble is mounting for debt-laden Jet Airways as latest media reports state the airline may not be able to operate as many as 42 of its fleet of aircraft in the next two days.

As many as 28 aircraft have already been grounded and by the end of February, another 14 planes will be grounded making it almost one-third of Jet Airways' fleet of 123 planes, reported Moneycontrol quoting an executive from the industry.

"Many of the 14 aircraft are taken off service due to lack of spare parts," the report said quoting a source.

Earlier this month, international lessors grounded more Jet Airways planes prior to potentially moving them out of India, as skepticism builds whether a state-led bailout of the carrier can clear their dues on time, sources familiar with the matter said, Reuters reported.

 Troubles mount for debt-laden Jet Airways as nearly one-third of fleet likely to be grounded soon

Representational image. Reuters.

“There’s some talk that the money is going to come but lessors have heard this for too long,” one leasing source said on condition of anonymity due to the sensitivity of the matter.

"We are not convinced with the restructuring plan. This is panning out just like Kingfisher. Banks took control but they never wanted to take a majority stake and run the airline,” sources said to Reuters.

Nine of Jet Airways’ planes have been grounded by lessors, versus the four it reported last month, with AerCap Holdings NV and BOC Aviation Ltd among those who have pulled out planes, sources told Reuters.

Cross-checks of the Jet Airways fleet by Reuters on FlightRadar24 also show that nine of its planes have stopped flying over the last four weeks. That excludes two more that are at Singapore’s Seletar Airport for, according to sources, maintenance work.

Jet Airways, however, said on 21 February that five planes had been grounded due to non-payment of dues to lessors, as reported to regulators. The carrier added it was keeping its lessors informed about efforts to improve its financial situation.

Jet Airways' fleet comprises mainly Boeing planes, including 16-owned aircraft. The rest are leased from many lessors including GE Capital Aviation Services, US-based BBAM and Japan’s SMBC Aviation Capital, sources said, underscoring the need to get lessors on board with the bailout plan.

SBI meet with Naresh Goyal, Etihad CEO Tony Douglas today

Meanwhile, State Bank of India (SBI) has called an urgent meeting of lenders with Jet Airways chairman Naresh Goyal and the domestic carrier's significant shareholder Etihad Airways' CEO Tony Douglas on Wednesday to discuss a way forward for the debt-laden airline, sources said.

The meeting, to be held at SBI's office in Mumbai, assumes significance amid differences persisting between Goyal, the lenders and Etihad, which has 24 percent stake in Jet Airways.

SBI is the lead lender of a consortium that has extended loans to Jet Airways.

While there was no official word from the airline, as also from the lenders, officials aware about the development said the meeting has been called by SBI and both Goyal and Douglas would be present.

Earlier on Monday, Jet Airways and Etihad said in a joint statement they along with key financial stakeholders are working towards finalisation of bank-led provisional resolution plan for the debt-laden domestic airline.

On February 14, Jet Airways board had approved a Bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become the largest shareholders in the airline. Its shareholders have also approved conversion of loan into shares and other proposals during the extra-ordinary general meeting (EGM) on 21 February.

— With inputs from agencies

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Updated Date: Feb 27, 2019 11:13:50 IST