Now, lenders ask DGCA to deregister crisis-hit Jet Airways' aircraft

Jet acquired 10 Boeing 777s in 2006-07 on loans from domestic and foreign banks
Lenders have begun repossessing Jet Airways’ Boeing 777 planes over loan default.

The airline has 10 Boeing 777 planes and flew them on European routes before suspending its operations last week.

An application has been made to the Directorate General of Civil Aviation (DGCA) for deregistration and exporting one such aircraft. The aircraft bearing the registration VT-JEK has been mortgaged to Dutch bank ING's Singapore branch, according to the regulatory filing. 

While the DGCA has deregistered more than 30 planes on requests from lessors, this is the first such application from lenders.

Jet Airways acquired 10 Boeing 777s in 2006-07 on loans from domestic and foreign banks. US EXIM Bank guaranteed the loans. According to sources, the airline defaulted on paying around $35 million due on six of the planes, prompting lenders to take action.

Jet stopped operations last week after banks refused emergency funding. Last Saturday Chief Executive Officer Vinay Dube and Deputy Chief Executive Officer Amit Agarwal met Union Finance Minister Arun Jaitley, seeking funds to resume services and pay at least a month's salary.  The airline is keen to resume its flights to Europe if funding is available.

ING said it couldn’t comment on individual loans or cases. However, EXIM did not respond to email queries on the matter.

The Boeing 777 planes are on financial lease and in such an arrangement the operator retains the plane on discharge of loans. Sources say a large portion of the aircraft loans have been repaid by Jet and the balance was to be cleared by domestic lenders, who would then secure a lien on them. These planes were to be used as collateral against fresh funding.

"The priority for the airline is to get its aircraft flying and for this we have been asking for money. If funds are not made available we may be left with no planes," an airline source remarked. 

One of its Boeing 777s has been seized in Amsterdam on court orders after the airline failed to pay its cargo handler while leasing companies continue to repossess their planes.