Debt-ridden Jet Airways may shut down temporarily as lenders still undecided on funding: Report

Threat continues to loom large on the survival of cash-strapped Jet Airways, which is likely to temporarily shut down its operations as the lenders have still not provide the ailing airline the promised emergency funds. Shares of Jet Airways plummeted nearly 19 per cent on Tuesday.

Sources at the airline said all efforts are being made and operations would continue till all options are exhausted. The final call would be taken by the end of the day, they added.

According to reports, the airline management has put forward the proposal of temporary closure of services after the lenders on Monday deferred the much-awaited decision on releasing the Rs 1,500-crore funds they had promised while taking over the carrier following the exit of founder Naresh Goyal.

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Jet Airways chief executive Vinay Dube in an internal communication said on Monday the lenders could not decide on the emergency funding and that the board of the airline will meet on Tuesday to take a call on the future.  

On March 25, the airline's board had approved 'the debt resolution plan', under which SBI-led consortium would provide an emergency loan of Rs 1,500 crore and in turn acquire majority stake.

But banks have so far disbursed only under Rs 300 crore and that too in small amounts, citing procedural delays. This left the airline cancelling hundreds of flights as the airline failed to pay the lease rentals.

However, Punjab National Bank (PNB) on Tuesday said that the lenders are committed to the revival of crisis-hit Jet Airways and working on the plan over the Rs 1,500-crore emergency funds promised by the SBI-led consortium to the ailing airline.

“Lenders are committed to Jet Airways revival plan. SBI, SBI caps have started working on the plan. Revival plan has not been finalised yet, discussion is still on,” said PNB Managing Director and CEO Sunil Mehta.

The airline is currently operating with only 6-7 aircraft. Rest of the planes in its fleet of 123, is on ground due to non-payment of rentals to the lessors and lack of cash to purchase jet fuel. According to government rules, a carrier should mandatorily have at least 20 aircrfat to operating internationally. 

SBI Capital Markets has the mandate for Jet Airways' sale on behalf of the SBI-led consortium of the domestic lenders to the debt-ridden private carrier. Last month, Goyal and his wife Anita Goyal stepped down from the board of the airline, which has more than Rs 8,000 crore debt.