Business Companies 19 Mar 2019 Jet Airways defaults ...

Jet Airways defaults for 3rd time, Naresh Goyal sees resolution

PTI
Published Mar 19, 2019, 12:40 am IST
Updated Mar 19, 2019, 12:40 am IST
Airline grounds four more planes; 41 now out of action.
Though Goyal sought more time to clinch the deal, he did not offer a time-line for the same.
 Though Goyal sought more time to clinch the deal, he did not offer a time-line for the same.

Mumbai: Jet Airways on 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.

The cash-strapped airline has grounded four more planes, taking the number of aircraft that are non-operational due to non-payment of lease rentals to 41.

 

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 per cent 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.

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