New Delhi: Banks are likely to infuse fresh funds into cash-strapped Jet Airways provided major shareholders of the airline, including Gulf carrier Etihad Airways, pledge their shares as collateral, sources said.
With the airline unable to get fresh funds, the options are limited now, they added.
The full-service carrier is grappling with acute financial woes that has resulted in the grounding of a significant number of planes, defaulting on debt repayments and delay in payment of salaries to pilots and other senior officials.
Founder Chairman Naresh Goyal and his family own around 52% stake in Jet Airways while Etihad, a strategic partner, has 24% shareholding.
The sources said that banks can provide further loans if major stakeholders –Goyal and Etihad — agree to pledge their shares as security.
A consortium of lenders, led by the State Bank of India (SBI), is working on a resolution plan for Jet Airways, which has a debt burden of more than Rs 8,200 crore.
Earlier, sources said that Goyal had agreed to pare down his holding to 22 % as part of securing a deal to bail out the airline.
Last week, a senior SBI official expressed hope that resolution should be finalised in a week or so.
On February 14, Jet Airways board approved a bank-led resolution plan whereby lenders would become the largest shareholders in the airline.
Following approval from the shareholders, part of debt would be converted into 11.4 crore shares at a consideration of Re 1 apiece as per the RBI norms.
Since January, Jet Airways has defaulted thrice on payments to its debenture holders.
So far, the finance ministry has maintained arm’s length in the matter due to its commercial nature and creditors and debtors are working on the resolution plan, according to sources.
In addition to their inability to pay off debt, Jet Airways is facing a pilot strike if they cannot pay salaries. Jet Airways’ pilots have set the deadline to receive salaries by April 1, 2019. With that date fast approaching, the outlook continues to worsen for Jet Airways.
Jet Airways pilots met under the National Aviators Guild to discuss their plans for flying with Jet Airways. After a quick 90-minute meeting, the pilots agreed they will cease flying on April 1st, 2019 if Jet Airways does not clear their unpaid salaries. Over 1,000 pilots who fly for Jet Airways are members of the National Aviators Guild.
This decision comes after months of salary reductions. Since December, pilots have not been receiving their full salaries at Jet Airways struggles to raise enough capital to remain afloat. Jet Airways has tried many tactics to lower their crew costs, however, it seems their efforts have fizzled.
Now, the pilots have enlisted the help of the government. On Tuesday, March 19th, India’s aviation minister directed a meeting regarding the state of affairs for Jet Airways. Due to a majority of its fleet being grounded, Jet Airways has been canceling many flights. This has worried India’s government.
According to the Directorate General of Civil Aviation (DGCA), Jet Airways is currently only flying 41 aircraft of their original 120-strong fleet. This number is shocking since it indicates a much higher number and percentage of grounded fleet than previously reported. Even then, some reports indicate that Jet Airways may have to ground even more aircraft.