In financial mess, Jet Airways cancels 15 flights, grounds 6 Boeing 737 planes
Jet Airways is facing acute debt crisis forcing multiple cancellation of flights from various locations across the country over past two days.india Updated: Jan 30, 2019 11:41 IST
A day after its shares tumbled on the Bombay Stock Exchange (BSE) sensitive index (sensex), cash-strapped carrier, Jet Airways cancelled 15 flights on Wednesday following grounding of six Boeing 737 planes over non-payment of lease rentals. Facing debts about $1.14 billion, Jet Airways had cancelled around 20 flights a day ago when three Boeing 737 aircraft were grounded.
“Jet Airways has defaulted on aircraft lease rentals and it has been forced to ground three more narrow-body Boeing 737 planes,” news agency PTI quoted a source as saying. Queries sent to the airline remained unanswered, the agency added.
The airline has cancelled several flights from/to Delhi, Mumbai, Chennai, Bengaluru, Pune, Hyderabad and Port Blair. Jet Airways is in talks with its partner Etihad for additional cash infusion. The full service carrier would be holding a meeting of the shareholders on February 21.
According to a regulatory filing on Monday, the airline is likely to seek approval of the shareholders for conversion of loan into shares or convertible instruments or other securities.
Meanwhile, Jet Airways creditor State Bank of India (SBI) is likely to own 15 per cent of the airline if the carrier’s plan for a debt-for-equity swap is approved. Fierce competition from rival low-cost carriers, a weaker rupee and high oil prices have hit the finances of Jet Airways.
It owes money to banks, pilots, vendors and lessors. Its lenders, including the SBI, could end up owning as much as 30 per cent while shareholder Etihad Airways could see its stake rise to more than 40 per cent from existing 24 per cent if it injects more equity in the Indian carrier.
The airline’s founder and chairman Naresh Goyal is likely to see his stake cut to below 20 per cent from 51 per cent. Jet Airways controls a sixth of India’s booming aviation market.
Indian banks in 2010 undertook a similar debt for equity swap to try and save Kingfisher Airlines, founded by liquor baron Vijay Mallya, and ended up owning nearly a quarter of the airline, before losing out when it was eventually grounded.
Jet defaulted on a debt payment to a consortium of Indian banks, lead by SBI, this month, prompting a downgrade by ratings agency ICRA.
The financial crisis of Jet Airways had its bearing on the company’s shares on Tuesday, when they fell over 1 per cent with airline deciding to seek shareholders’ approval for conversion of loans into shares. At one point during the day, the scrip had dropped more than 2 per cent but recovered later.
(With inputs from agencies)
First Published: Jan 30, 2019 11:21 IST