Jet Airways crisis deepened on Monday as Etihad refused to step into the shoes of the promoter of the Indian troubled carrier, according to NDTV.
In its meeting with lenders, Etihad, the Gulf-based airline, did not commit to hiking stake as it had several pre-conditions, outside the ambit of lenders, for taking the role of a promoter.
On Monday, Jet Airways informed the stock exchanges that it will default on interest payments on its bonds, that are due on Wednesday, due to “temporary liquidity conditions”.
And Jet Airways will from Monday suspend all its flights to and from Abu Dhabi, the base of Etihad which has 24 per cent stake in it and from whom fund infusion is awaited for Jet to survive.
In a notice Etihad Airport Services warned passengers of “minor disruption” due to the “short notice of flight cancellation”.
Later in the day, it said four more aircraft were grounded due to non-payment of dues to lessors.
The airline is operating with half its original fleet and managing only 200 flights a day – half its normal schedule. Largescale cancellations are resulting in rising refund claims.
The airline’s pilots, who like engineers and senior management, have salaries overdue for three months, will meet in Mumbai to decide the next course of action.
Jet chairman had asked Etihad, which has 24% stake in the airline, to bring in Rs750 crore demanded by lenders as promoter contribution. Etihad, however, expressed that it was willing to sell its 24% stake if it got a price of Rs150, which is much lower than the current price of Rs 236.
Lenders are willing to provide support but unwilling to hold more than 49% equity through debt conversion.
According to sources, the government has asked lenders to work out a resolution for Jet in the same manner as in a bankruptcy proceeding but outside the ambit of the National Company Law Tribunal.
Last week, SBI chairman Rajnish Kumar had said that his bank was keen to ensure that the airline keeps on running.
Currently, the airline is operating thanks to cash from advance bookings and credit from oil companies and the Airports Authority of India.
From Monday, Jet has discontinued all flights to Etihad’s hub at , cutting off the latter’s traffic feed from India for onward flight in its wide-body aircraft.
“Due to operational reasons, Jet has cancelled a number of flights to and from Abu Dhabi. All affected Etihad guests have been rebooked on to alternative Etihad-operated flights or offered refunds as per standard policy,” an Etihad spokesperson said.
UAE’s envoy to India Ahmed Al Banna put the ball on Jet’s court. “Etihad owns 24% of Jet Airways, and Jet has its own program and management and decisions. Yes, they may be facing some difficulties, but it is up to Jet to decide what they want to do,” he told agencies.
Passengers of cancelled flights are complaining of delay in refunds. “Our instructions for airlines is to ensure DGCA regulation in such situations and keep updating us for compliance,” Director General of Civil Aviation B S Bhullar said.
In a mail to employees, Goyal sought more time to resolve the situation.
Earlier this month, he had assured them the same would start happening by Monday (March 18). “The complexity of the (bank-led provisional resolution plan, BLPRP) process though has led to some delays and will require further short time to conclude… I am personally committed to have the process completed as soon as possible and restore much-needed stability to our operations at the earliest. Meanwhile, talks with our Strategic Partner Etihad Airways and lenders led by SBI are ongoing,” Goyal’s letter says.
On flight cancellations, he said Jet had done so as “a responsible airline to curtail our schedule and network according to the number of aircraft we are currently operating”. “I am fully committed to ensuring that your deferred salary dues are cleared on priority once all parties sign off on the resolution plan,” he added.