20,000 Jobs at Stake as Jet Airways Grounds Flights After Lenders Refuse Rs 400 Crore Lifeline
Sources said that this is the end of the road till a buyer emerges for the debt-ridden airline. There is no clarity on what happens to the employees in the interim.
New Delhi: Cash-strapped Jet Airways has cancelled all its domestic and international flights with immediate effect after lenders rejected the airline’s request for an emergency fund infusion of Rs 400 crore. An Amritsar-Delhi flight will be its last for now.
"We were informed by SBI that they will not be able to consider interim funding of Rs 983 crore. Hence, we are compelled to cancel all our international and domestic flights with immediate effect. However, we will keep supporting the bid process initiated by lenders. The sale process may take some time, Jet Airways said in a statement, adding that they, however, cannot answer questions on what may happen to their employees after the sale process.
After flying for 25 years, Jet Airways has announced temporary grounding of operations, putting at stake 20,000 jobs and thousands of crores in passenger refunds, dues to vendors and over Rs 8,500 crore to banks.
Sources said that this is the end of the road till a buyer emerges for the debt-ridden airline. The lenders have shortlisted four candidates, including the Etihad, and hope that the bid process will be completed by May 10. There is no clarity on what happens to the employees in the interim.
Etihad, which had formally communicated its intent to raise its stake in the cash-strapped airlines, is presently assisting Jet passengers and assisting them with travel arrangement. The UAE-based airlines in a statement said, "We continue to re-accommodate and support affected guests. Our teams Are assisting them with travel arrangements."
Teetering for over four months due to cash-drought, the 25-year-old airline was saddled with roughly Rs 8,000 crore of bank debt. It was flying on a prayer the last few weeks after failing to receive a stop-gap loan of about Rs 1,500 crore from its lenders, as part of a rescue deal agreed in late March.
The airline said the decision follows the lenders refusing to offer a lifeline.
"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... and has decided to go ahead with temporary suspension of operations," the airline said.
Accordingly, the last flight will leave the Amritsar airport at 10.30 pm for New Delhi as per its flight schedule.
After a board meeting Tuesday, the management had authorised chief executive Vinay Dube to make one last appeal to the lenders for an emergency Rs 400 crore funding, and if not the demand is not met, take a final call on the future of the airline Wednesday.
Late last night, Jet Airways was informed by State Bank of India, on behalf of the consortium of lenders, that they were unable to consider its request for critical interim funding, the airline said in the statement.
"Bankers did not want to go for a piecemeal approach which would keep the carrier flying for a few days and then again risk having Jet come back for more interim funding," one of the bank sources directly involved in Jet's debt resolution process told news agency Reuters.
The once leading airline has been defaulting on payments, forcing its lessors to retake almost all its planes and it was operating just about six planes as of Tuesday.
Jet is the seventh airline to go down since May 2014 and the 13th one after East West was shuttered. During the past five years airlines like Air Pegasus, Air Costa, Air Carnival, Air Deccan, Air Odisha and Zoom Air have all gone belly up even as the government boasts of double-digits growth for more than four years in tow.
According to sources, the government is maintaining distance from the Jet affairs citing the matter is a commercial decision of banks.
Founded by Naresh Goyal, who began as a general sales agent to a host of international airlines with travel agency Jetair, the full-service carrier served tens of millions of passengers for over two-and-half decades, before becoming the seventh domestic carrier to shutter operations in the past five years.
However, the once-premier airline flew into deeper turbulence-second in its history after the 2010 crisis — after four back-to-back quarterly losses, leaving it gasping for financial breath and forcing it to default on payments to nearly all — from banks to lessors, to employees, and eventually leading to the shutdown from tonight as its fleet strength has crimped to just about five planes from 123 in December last.
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