Jet lenders to stick to resolution plan; but no word on funding

Last Updated: Fri, Apr 05, 2019 10:28 hrs
A Jet Airways aircraft takes off from the Chhatrapati Shivaji international airport in Mumbai

New Delhi: The lenders to the financially challenged Jet Airways on Thursday said they intend to pursue the bank-led resolution plan for the airline under the present legal and regulatory framework.

The development assumes significance following the Supreme Court's decision to annul a February 12, 2018 Reserve Bank of India (RBI) circular on bad debts. The judgement was seen as a major setback for the resolution process.

The consortium of lenders led by the State Bank of India (SBI) met in New Delhi on Thursday to take stock of the current situation of the company.

In a statement issued on late Thursday evening, the consortium said: "The lenders intend to pursue the bank-Led resolution plan for sale of stake in the company in a time-bound manner under the present legal and regulatory framework and intend to invite expressions of interest."

"This will be invited on April 6, 2019 and will need to be submitted by April 9. The Lenders are cognizant that the outcome of the efforts of the lenders will depend on the interest shown by the parties on sale of stake in the company."

As per the lenders' statement, all efforts will be made for the stake sale and other options may be considered by them should these efforts not result in an acceptable outcome.

The lenders did not divulge any information about the present funding needs of the airline.

Jet Airway's former Chairman Naresh Goyal has said he has cooperated fully and facilitated the bank-led resolution programme for the company.

On March 25, Goyal had stepped down from the board of the airline and ceded majority control to the SBI-led consortium.

Under the debt resolution plan, the lenders would inject up to Rs 1,500 crore working capital into the airline and convert their debt into equity, to revive the airline and then sell their stake in it.

The airline owes over Rs 8,000 crore to lenders, led by the State Bank of India (SBI).

At present, the airline is hard-pressed for funds. It is expected to receive the first tranche of the Rs 1,500 crore promised by banks as part of the debt resolution plan.

Industry sources informed that the first tranche of fund is expected in a day or two.

However, without further funding the airline's fleet size is expected to shrink further. It has alredy shrunk to 26.

Earlier in the day, Civil Aviation Secretary Pradeep Singh Kharola told reporters in New Delhi that Jet now operates a fleet of 26 aircraft and that the airline fulfils the norms for operating international operations.

As per rules, an airline needs to have minimum 20 aircraft to be eligible to operate international flights.

According to the Directorate General of Civil Aviation (DGCA), the Jet Airways operated a fleet of 28 aircraft on Wednesday.

Last month, Kharola had said that nearly 80 per cent of Jet's fleet is likely to be back in operation by the end of April as it would re-induct 40 aircraft by then.

A total of 75 aircraft are envisaged to be back in operation by April-end which is around 80 per cent of the Jet's aircraft fleet previously.

Jet Airways has been struggling with cash flows for the past six months because of rising fuel costs and intense competition. It has even delayed payment to lessors, airport operators and oil marketing companies besides a part of its workforce to keep the company running.

On Wednesday evening, the airline informed employees that salaries for March will be delayed. Salaries are pending since January.