SINGAPORE/NEW DELHI: Crisis talks between India’s cash-strapped Jet Airways Ltd and aircraft lessors have failed to ease a row over late payments, prompting some lessors to explore taking back aircraft, three people familiar with the matter said.
In what one of the people described as an ill-tempered showdown between the airline and some of the world’s leading leasing firms, Jet’s main lender State Bank of India sought to provide reassurance that India’s biggest full-service carrier is doing all it can to pay its staff, suppliers and creditors.
“Jet has been delinquent for many months. Nobody wants to get in a situation where the problems worsen and it becomes even more difficult to take out aircraft,” one of the people said.
Jet controls over a sixth of a market experiencing an unprecedented boom in air travel. Yet high fuel taxes, a weak rupee and price competition have squeezed profitability, leaving Jet with Rs 80.52 billion ($1.14 billion) in net debt as at the end of September and defaulting on payments.
The airline had previously told some lessors it would clear arrears by December 31, but was unable do so, the people close to the matter said.
At meetings on Tuesday, held at SBI’s headquarters in Mumbai’s business district, the bank’s Chairman Rajnish Kumar was asked how Jet planned to raise equity or debt, said one of the people — an attendee, who found the responses lacked sufficient detail.
Other attendees included Jet’s management team, including the airline’s founder and Chairman Naresh Goyal, as well as a senior adviser of Etihad Airways, which owns 24 per cent of Jet and which did not provide any assurances, the person said.
An official from Punjab National Bank later said lenders have “in-principle” agreed to extend some help to Jet, but details on the mechanics of it are still being worked out.
Some lessors have engaged with lawyers, are working with their technical teams about repossession and are monitoring the planes, but the situation could be complicated by a new bankruptcy law that allows up to 270 days where no action is permitted against the debtor or its assets, the person said.
Lessors such as GE Capital Aviation Services (GECAS) SMBC Aviation Capital and Jackson Square are looking into stopping the transfer of Boeing Co 737 MAX jets that had been due for delivery to Jet, the person said.
A second person said deliveries of 737 MAX jets from lessors had been behind schedule since November.
— Reuters
Oman Observer is now on the WhatsApp channel. Click here
