(Photo courtesy: Jet Airways)
Several long-term business partners of Jet Airways
have stepped in to ease the pain for the cash-starved company, it is learnt. Help is coming from aircraft manufacturers, lessors and even state-owned Airports Authority of India (AAI), a source said.
Pre-delivery payment is the amount that an airline pays as commitment for fulfilling an order. In the case of a sale-and-leaseback transaction, an airline orders the aircraft and typically pays 20-30 per cent of the aircraft cost. At the time of delivery, the lessor makes the final payment on behalf of the airline and leases the plane.
has returned some cash to the airline which will help it improve the current liquidity crisis. The money will be paid back later,” a source said. Business Standard could not confirm the amount that has been paid to Jet Airways. Boeing
did not reply to the queries sent by the newspaper. A Jet Airways
spokesperson refused to comment, saying these were business matters internal to the company.
Mumbai-based Jet Airways
is losing Rs 50 million to Rs 100 million daily in operations leading to fears that the airline could default in its payment obligations. The airline had reported a loss of Rs 10.4 billion in the fourth quarter of FY18, capturing the financial problems in the company.
The airline management came under criticism after pilots, who were asked to take a pay cut, questioned how the company was acquiring planes despite a financial stress.
For Boeing, Jet Airways
has been a loyal customer for years. In 2015, Jet Airways
placed an order for 75 Boeing
737 Max aircraft, and followed it up with two more tranches of order for the same type of aircraft, taking the total order for Boeing
737 Max to 225.
had offered similar financial assistance to low-cost airline SpiceJet when the airline faced a near shutdown in 2014. Since then SpiceJet showed a significant improvement in operations and increased business with Boeing, placing an order for 205 planes.
in renegotiating leasing terms with aircraft lessors, it is learnt. “As part of its cost-saving exercise, the airline has approached lessors, seeking discounts,” one of the sources quoted above said.
Jet Airways, which had earlier struck sale and leaseback deals with Dublin-based SMBC Capital and GE Capital Aviation Services (GECAS) for 737 Max planes, has approached both for discounts. GECAS
and SMBC Capital refused to comment on specific queries on discounts, but they said that they had not sent any default notice to the airline.
As for Airport Authority of India, it is favourably considering Jet Airways
request for extending the window of credit facility from 15 to 30 days, a senior official at AAI
According to reports, the airline has also sought help from overseas lenders’ consortium, seeking a waiver of a loan covenant on its existing debt facility of about $185 million.
Rising jet fuel prices
and a weakening rupee have added to the operating costs of Indian airlines as a majority of the payments are dollar-denominated, resulting in carriers reporting losses or lower profits in the past couple of quarters.
Boeing has returned a portion of the payment done by Jet Airways for aircraft order
Jet has approached the lessors to renegotiate lease payments on aircraft
The AAI is favourably considering a proposal by the airline to increase the credit period from 15 to 30 days
Jet is facing a severe liquidity crisis due to high fuel cost and exchange rate fluctuation