The troubled Jet Airways has announced that it is temporarily suspending all the flights as it has no cash to pay for fuel and other critical services.
Jet Airways may also face suspension of license if it doesn’t get its flights back. It’s last flight operated yesterday, i.e., Wednesday, April 17, 2019.
With deep sadness and a heavy heart we would like to share that, effective immediately, we will be suspending all our domestic and international flight operations.
— Jet Airways (@jetairways) April 17, 2019
More: https://t.co/SaQ2iwIBRJ
The move came after Jet’s last attempt to raise interim loans failed. The CEO of Jet Airways – Vinay Dube had approached the banks for a loan of Rs. 400 crores but the banks rejected the request as Jet Airways had failed to provide additional collateral.
Jet Airways has a debt of U.S. $ 1.2 billion and has been in talks with lenders for weeks. It has not made any payment towards its loan, vendors and lessors since the beginning of 2019. It has also not paid salaries to its pilots, engineers and ground staff for months.
A media statement from jet Airways read, “Late last night, Jet Airways was informed by the State Bank of India (SBI), on behalf of the consortium of Indian lenders, that they are unable to consider its request for critical interim funding. Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going. Consequently, with immediate effect, Jet Airways is compelled to cancel all its international and domestic flights. The last flight will operate today.”
It further stated, “Jet Airways is hopeful that it will be able to bring the joy of flying back to its guests as soon as possible.”
Responding to the decision, the Ministry of Civil Aviation (MoCA), tweeted, “Jet Airways has informed MoCA that it is temporarily ceasing operations. The bank-led resolution process is still underway and expected to end by May 10. During this time, MoCA will support the resolution process within the existing legal and regulatory framework. DGCA and other regulators are monitoring the situation carefully to ensure that all existing rules regarding refunds, cancellations, and alternate bookings are followed strictly.”
Jet Airways has informed MoCA that it is temporarily ceasing operations. The bank-led resolution process is still underway and expected to end by May 10. During this time, MoCA will support the resolution process within the existing legal and regulatory framework. (1/5)
— Ministry of Civil Aviation (@MoCA_GoI) April 17, 2019
While Jet had been running a bare minimum number of 35-40 flights for the last few days, a complete suspension would impact its valuation as potential investors are undergoing a bidding process to invest in the airline.
In the meantime, its consortium of lenders, led by SBI, have selected Etihad Airways that already owns 24% of the airline as one of the bidders. Other interested parties include Private Equity (PE) investors TPG Capital, Indigo Partners and the state-run National Investment and Infrastructure Fund. The binding bids have to be submitted before May 10, 2019.
Founded by Naresh Goyal, Jet Airways started in 1993 as an air taxi operator and grew into one of the biggest carrier with a premium international network. At its peak, it operated 600 domestic and 380 international routes.
It faced severe competition in the market in 2000s from Air Sahara, Kingfisher Airlines, IndiGo and SpiceJet. However, it bought out Air Sahara in 2007 for Rs. 2,050 crores in a deal which troubled it for years later with additional costs, taxes as well as legal and manpower issues.
It faced its first major financial turbulence in 2011-12 and had to sell 24% stake to Etihad Airways for U.S. $ 379 million.
