In a damage control exercise, the bank said that necessary support to facilitate the process was being extended by the lenders in the consortium. “Cooperation by and support from all the other stakeholders will be the key to the success of the process,” it said.
If Jet goes down, it will be the second pan-Indian operator to go belly up. Kingfisher Airlines was grounded in 2013.
The decision not to issue any emergency funding to the airline was taken after an hour-long meeting of the lenders’ consortium with Jet Chief Financial Officer Amit Agarwal. “The consortium refused to release any more interim funding before becoming certain about the credibility of potential investors,” said a person aware of developments. Airline executives said operations were likely to be temporarily grounded as the cash had been exhausted. “First, there is no money left to pay the oil companies
for even a day. Second, there is no meaning to continue with skeleton operations as it just adds to the losses,” a Jet executive said. Of the seven aircraft the carrier is operating, five are smaller turboprop planes.
“The interim funding has not been forthcoming thus far. The current status of our engagement with lenders and other related matters shall be placed before the board in the meeting scheduled for tomorrow (Tuesday). The management will seek guidance from the board on the next step forward,” Dube said in an internal communication sent to anxious staff. The message was reviewed by Business Standard.
The likely grounding will put the sale process of Jet in jeopardy, merchant bankers said. The lenders’ consortium had called for expressions of interest to buy a controlling stake (51-75 per cent) in Jet. Following that, Abu Dhabi-based Etihad Airways, which currently owns 24 per cent stake in the airline, private equity fund TPG Capital, India’s government-owned sovereign fund National Investment and Infrastructure Fund
(NIIF), and ousted chairman Naresh Goyal
had formally approached the airlines. “It will have to be seen if the buyers are still interested in an airline which has been grounded. The cost of revival goes higher, the airline will lose valuable slots, lessors will repossess aircraft, making the sale difficult,” the merchant banker said. Jet owes around Rs 10,645 crore to operational creditors beside the Rs 8,500-crore bank debts, according to the latest available figures.
After lenders refused emergency funds, the suspension of international operations was extended till at least April 18
Consortium refused to release more funds before becoming certain about the credibility of potential investors, sources said
State Bank, however, said necessary support to facilitate the process was being extended by the lenders' consortium