New Delhi: As Jet Airways, one of India’s largest airlines, hurtled towards bankruptcy, the government on Tuesday called an emergency meeting with its management. The cash-strapped carrier is struggling to make payments to its creditors and has been forced to cancel hundreds of flights as it fights competition, a weak rupee and rising fuel costs. The maintenance engineers’ union of the airline on Tuesday wrote to the aviation regulator DGCA that they are owed three months of salary and flight safety “is at risk”.
Civil Aviation Minister Suresh Prabhu tweeted on Tuesday morning that he had asked for a compliance report from Jet and the aviation watchdog, the DGCA (Directorate General of Civil Aviation) immediately. Prabhu also said he had asked for an emergency meeting on the issues such as grounding of aircraft, advance bookings, cancellations and refunds.
There are reports that the government has asked central banks to bail out Jet Airways for the moment to prevent the airline going bankrupt.
In an alarming letter to the DGCA, the Jet Airways aircraft maintenance engineers’ association has written that “it has been arduous to meet financial requirements, which has adversely affected the psychological condition of Aircraft Engineers and therefore the safety of public transport airplanes being flown by Jet Airways across India and the world is at risk.”
“It is a dynamic situation and there may be further attrition in coming weeks,” the aviation regulator said in a statement. Asserting that it is ensuring that all aircraft in the fleet are maintained in accordance with the approved maintenance programme, DGCA said it is “continuously monitoring overall situation and based on the same, will take appropriate steps by the end of the month, if needed.”
Jet has a debt of more than 1 billion US dollars. The airline has delayed payments to banks, suppliers, pilots and lessors – some of whom have forced the airline to ground as many as 41 planes, which is more than a third of its entire fleet. The airline said it would delay paying interest to its debenture holder, due March 19, because of financial constraints.
In a letter to the airline’s pilots on Monday, Naresh Goyal, the founder of the airline, said he would need “a further short time” to finalise a rescue deal for the cash-strapped carrier as the process is complex.
Goyal, who transformed Jet into India’s biggest full-service carrier from its start 25 years ago, also mentioned ongoing talks for the rescue deal with Etihad Airways, the airline’s biggest shareholder, and the group of lenders led by State Bank of India (SBI). The rescue deal has either not made enough progress or, according to some reports, may have effectively failed.
Goyal said he was “committed to have the process completed as soon as possible and restore much needed stability” to the airline’s operations, and that he would make it a top priority to settle delayed salary payments for pilots and some other staff once a deal is finalised.
Earlier on Tuesday, the airline said it had grounded four more planes and would delay paying interest on maturing debt in a fresh sign of deepening liquidity crisis engulfing the carrier.
Shares in Jet Airways shed as much as 5 per cent on Tuesday to an intraday low of Rs. 225.10 apiece on the BSE, underperforming the broader markets whose benchmark was set to close higher for the seventh consecutive session. The Jet Airways stock has declined 19 per cent so far this year.
