Lenders look to investors to bail out grounded Jet Airways

Jet Airways, India’s largest private carrier, stopped all flights after almost 26 years of operations, on Wednesday. It may now take to the skies only if a new buyer is willing to infuse funds into the airline, say lenders.

The airline’s closure put at risk 22,000 jobs, including engineers and pilots who were denied salary for months together. "Where is the government when so many jobs are on the line?" a Jet Airways staff asked.

Employees of debt-laden Jet Airways, which stopped operations on Wednesday indefinitely, turned up today outside the Mumbai headquarters of the carrier that was once India's biggest private airline, to seek answers from the management on how they plan to pay the staff.

"Gratuity, provident fund, nothing is being given. The labour ministry is not doing anything," the Jet Airways staff told reporters.

In its statement issued in the morning today, the consortium of lenders said: “The lenders after due deliberations decided that the best way forward for the survival of Jet Airways is to get the binding bids from potential investors who have expressed EoI (expression of interest) and have been issued bid documents on 16th April.”

The group of lenders want a new investor to buy up to 75 per cent stake in Jet Airways.

The lenders said they are hopeful that the bidding process will lead to determining “fair value of the enterprise in a transparent manner”.

On Wednesday, Jet Airways announced its decision to stop flying, stating that it is simply unable to conduct flight operations "in a manner that delivers to the very reasonable expectations of its guests, employees, partners and service providers".

"Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going," it said.

Jet Airways had already cancelled all international flights ahead of the complete pull-out. "The last flight will operate today," it noted.

The decision from the cash-stressed company comes shortly after banks refused to provide it with an emergency funding of Rs400 crore. This came as a death blow to the company which has already been operating only a handful of its planes - five from a fleet of 123 aircraft till last December.

In a communication to the employees, Jet CEO Vinay Dube said: “We must also be realistic that the sales process will take some time and will throw up several more challenges for us, many of which we don’t have the answers to, today. For example, we don’t have an answer today to the very important question of ‘what happens to us employees during the sale process’.”

Airfares, meanwhile, surged and are expected to go up further in the absence of a key player in the market.

Jet is saddled with a debt pile of more than Rs8,000 crore and owes vast sums to lessors, suppliers, pilots and oil companies. The carrier needs an immediate infusion of funds to get its planes back in the air and restore some of its key sectors to start generating revenue.

The government, meanwhile, directed the civil aviation secretary to review the issues ailing the airline. On Wednesday, the ministry said it will hold meetings with airports and airlines today.

The lenders, after calling for Expression of Interest (EoI), short-listed four potential investors: Gulf airline Etihad Airways, state-owned National Infrastructure and Investment Fund and private equity firms Indigo Partners and TPG. The bid process will conclude on 10 May.

Jet Airways’ stock plummeted 30 per cent after the company announced plans to temporarily suspend all flights, putting passengers also in trouble.

Jet Airways shares plunged as much as 34 per cent in morning trade on Thursday. On the National Stock Exchange (NSE), the stock fell to as much as Rs158.70 apiece, compared with the previous close of Rs240.50.