Around 40 per cent of Jet Airways’ flights of 123 is grounded due to non-payment of lease rentals and lack of spares, said a senior official at the Directorate General of Civil Aviation (DGCA) said on Thursday.
BS Bhullar, the director general DGCA said the aviation’s schedule is being monitored per month as its fleet count has been reduced to 70.
“Jet’s financial situation is well known. We are in constant touch with the airlines. We have told them to inform passengers about cancellations well in advance so that inconvenience is minimised,” Bhullar told reporters. He added that forward sales would not be banned as it can create a panic in the industry.
Cash-strapped Jet Airways had a fleet of 123 aircraft, including Airbus A330s and Boeing 737-800s, at the end of December 2018.
Jet Airways was forced to ground three more aircraft on Thursday due to non-payment of lease rentals, the airline said in an exchange filing. This has taken the total number of aircraft grounded on account of rental defaults to 28 including newly-introduced Boeing 737 Max. Other 25 aircraft are reportedly parked at different airports for want of service and spare as the full-service carrier faces its worst financial crisis.
According to DGCA sources, the airline has been compelled to cancel nearly 200 domestic flights every day, approximately a third of the daily schedule of 600 flights.
The beleaguered airline, which is looking for an investor to bail it out, is negotiating with lessors, the management said.
After announcing the grounding of four of its planes on February 7 for non-payment to lessors, the airline took another two aircraft out of operations due to similar reasons on February 23. On February 27 and 28, Jet Airways grounded seven and six aircraft, respectively, due to the non-payment of lease rentals. Later, two aircraft were grounded on March 1 and as many on March 2 and March 4.
According to sources, Jet’s equity partner Etihad Airways may be unwilling to infuse any funds in the interim in the cash-strapped carrier. The Abu Dhabi-based airline, which has a 24% stake in Jet, is believed to have decided to infuse funds only after the bank-led resolution plan (BLRP), which is being piloted by State Bank of India, is finalised and approved.
Meanwhile, Jet founder Naresh Goyal may be willing to step down as the chairman of the airline’s board. Since the BLRP’s finalisation and approval from all the stakeholders concerned will take time, the airline needs funds in the interim to pay its pilots, vendors and aircraft leasing firms.
As is known, the bank-led resolution plan includes infusion of funds, restructuring of debt and monetisation of assets. The BLRP has estimated a funding gap of around Rs 8,500 crore (including proposed repayment of aircraft debt of around Rs 1,700 crore) which will be met by an appropriate mix of equity infusion, debt restructuring, sale/sale and leaseback/refinancing of aircraft, among other things.
Once approved by all the required sections, lenders, led by SBI, will become the largest stakeholders in the airline. The stake of Goyal would come down to around 20-22% from the current 51%.
According to the monthly passenger data, Jet’s domestic passenger count was down 9% year-on-year during January while its market share fell to 11.9% – the lowest in at least five years – behind national carrier Air India’s 12.2%.