Jet defaults for 3rd time... this time to debenture holders
Mumbai: Jet Airways Monday defaulted on payment to its debenture-holders—the third default since January—even as airline chairman Naresh Goyal assured the employee of a resolution in the immediate possible time, but said more time is needed to clinch bailout.
Goyal, in a letter to the 16,000 staff, which comes ahead of the domestic pilots body National Aviator's Guild annual meeting here, said talks with the airline's strategic partner Etihad Airways and SBI-led lenders are going on.
Though Goyal sought more time to clinch the deal, he did not offer a time-line for the same.
The UAE flag carrier owns 24 percent in Jet and its board is considering a draft agreement as part of a debt- recast plan being mooted by the airline's lenders led by SBI.
Earlier, Jet informed the exchanges that "the payment of interest due on March 19 to the debenture-holders will be delayed owing to temporary liquidity constraints."
This is the third time the airline is defaulting in this year as earlier it failed to meet its payment obligations towards the domestic banks' loans (in January) as well as on part-repayment of its external commercial borrowings due to liquidity crunch earlier this month.
The airline, which has a debt of over Rs 8,200 crore, did not specify what is the quantum of interest due Tuesday nor quantum of the debt on this particular account.
On February 14, its board had approved a bank-led- resolution plan, whereby the SBI-consortium of lenders will become the largest shareholders in the airline and Goyal would exit the management as the chairman and board member.
If the resolution plans goes through, banks would convert a part of their debt into 11.4 crore shares for a consideration of Re 1 as per the RBI norms.
Last week, SBI sounded hopeful of reaching an early solution by this week.
In his letter to the employees, Goyal said, "the situation, though complex, has my personal attention towards an early resolution...the complexity of the process though has led to some delays and will require further time to conclude."
"Once again I assure you that I am personally committed to have the resolution process completed as soon as possible and restore the much-needed stability to our operations at the earliest," he said.
Since a larger number of planes from its over 100- fleet are grounded leading to drastically curtailed operations, the airline is struggling to prevent a nose-dive somehow. Of this as many as 41 aircraft are grounded for non- payment of lease rentals to lessors.
Following this, the airline has indefinitely suspended its operations from Abu Dhabi, one of its two global gateways the other being one in Amsterdam. Jet Airways has been struggling to mop up cash to carry out operations.
While discussions with the lessors continue, Goyal said as a responsible airline, Jet has "consciously" and "proactively" decided to curtail its schedule according to the number of aircraft it is currently operating.
"This will ensure the sanctity of our schedule, while keeping the regulatory authorities briefed," said Goyal, who set up the airline after converting his airline ticketing business a quarter of a century ago.
For the past few weeks, its passengers have been venting their ire on social media as its flight cancellations have increased gradually due to rising number of planes getting grounded.
On the non-payment of salaries to pilots along with senior management and engineers, Goyal said he is fully committed to ensure that their dues are cleared on priority once all parties sign on the resolution plan.
The pilots with other senior staff are to get their full salaries of January and February besides 87.5 percent of the December pay.
"We are holding our annual meeting Tuesday. During the meeting, besides discussing our general issues, we will also be deliberating on the present scenario (non-payment of salaries)," a source said earlier in the day.
Having failed to get any assurance from the management on payment of overdue salaries, the pilots body last week wrote to Union labor minister Santosh Gangwar, seeking his intervention in recovering their dues along with the accumulated interest.
The acute liquidity crunch has forced it to ground aircraft, shut down stations and delay salary payments to its pilots and engineers along with other senior staff.
It has grounded four more planes, taking the number of aircraft that are non-operational due to non-payment of lease rentals to 41.
"... an additional four aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements," the airline said in a filing to the stock exchanges.
According to the company, as mentioned earlier, it is actively engaged with all its aircraft lessors and are regularly providing them with updates on the efforts taken to improve the liquidity.
"Aircraft lessors have been supportive of the company's efforts in this regard," it said, adding that all efforts are being made to minimise disruption to its network.