India's Jet Airways faces imminent shutdown without emergency funds

Jet Airways

Jet Airways

India's oldest private airline Jet Airways said that it is temporarily suspending operations from Wednesday night after banks, led by State Bank of India, rejected the airline's request for an immediate fund infusion of Rs 400 crore.

Jet Airways had asked lenders to release an interim fund of Rs 400 crore after its current operational fleet further shrunk to just five aircraft. Hence the government has decided not to meddle in the carrier's affairs and let the lenders take a call.

Fugitive businessman and owner of the now-defunct Kingfisher Airlines Vijay Mallya on Wednesday attacked the Modi government for allegedly discriminating between state-owned and private airlines while extending his sympathies to Jet Airways founder Naresh Goyal and his wife Neeta.

"Bankers did not want to go for a piecemeal approach which would keep the carrier flying for a few days and then again risk having Jet come back for more interim funding", said one of the bank sources directly involved in Jet's debt resolution process.

The airline, which has a huge debt pile on its books, is in the midst of a stake sale process with bids being scrutinised for the final round.

A year ago Jet had more than 120 planes operating, but the full-service airline has been hit by competition from low-priced carriers such as IndiGo and SpiceJet, along with high oil prices, fuel taxes and a weak rupee.

The SBI-led consortium is looking for a buyer for Jet and a deadline passed on Friday for prospective bidders to express an interest in acquiring a 75% stake in the carrier.

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Stewardesses from Jet Airways (L) and Etihad Airways listen to a news conference by Naresh Goyal, chairman of Jet Airways and James Hogan, chief executive of Abu Dhabi's Etihad Airways, (both not seen) during a news conference in New Delhi July 23, 2014.

"The decision has been taken after a painstaking evaluation of all alternatives that were made available to the company and after receiving guidance and advice on the same from its Board of Directors", the crisis-hit airline said.

A source at the Jet Airways also said the airline was likely to shutter soon as the banks have not extended it the required financial support. In order to operate on worldwide routes, any Indian airlines needs to have 20 planes in operations at any given time.

Passengers from within and outside the country who had booked tickets with Jet Airways faced inconvenience and were left stranded at various airports, as per media reports.

But the immediate worry is the lack of funds to keep the company afloat.

Jet's pilots along with engineers and senior staff were last paid for December 2018.

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