8 April 2019: The Rs 1,500-crore emergency funding Jet Airways was supposed to get is now down to Rs 200 crore in the best case scenario as lenders led by SBI await RBI’s fresh norms for debt restructuring after Supreme Court last week struck down the central bank’s controversial February 12 circular.
Bankers said the funding will enable Jet to part pay dues to agencies such as airports, oil companies and statutory charges. “This money is meant for crisis management while the bidding process starts,” a senior banker told TOI.
Airline sources, however, said that the private carrier is now on the razor’s edge as a small funding is unlikely to help the airline live long enough to wait for the bigger infusion that is required. “They (lenders) are putting in very small amounts only in dire situations like two small banks (not SBI) giving Rs 33 crore to Jet last Friday when Indian Oil cut off fuel supply. It is a very touch-and-go situation. Whether the airline can afford to wait for the new circular and then emergency funding to flow in or will shut down before that remains to be seen,” said a person in the know of developments.
While in past few months, only salaries of highly-paid personnel like pilots, engineers and senior management were delayed, the March salary has not been paid to anyone, including the low-rung employees. “Lenders are waiting for RBI to come out with a similar circular. Till then they may keep giving some oxygen. If the circular takes long or no bidder comes for Jet, then Jet is staring at insolvency and closure,” said a source.
The airline’s international flights on wide-body aircraft are no longer offering inflight entertainment as the content is licensed and needs to be paid for. Lounge access for premium passengers has been discontinued at many airports. The airline did not comment on this issue. In such a situation, whether the remaining oxygen in Jet’s lungs can sustain it till emergency funding comes remains to be seen.
In Kingfisher’s case, for instance, unpaid-for-months technicians got so agitated that on one day in October 2012 they refused to put chocks in front of and behind aircraft wheels after the airline’s flight landed. As a result, passengers remained stuck inside aircraft and could not alight. The same day Kingfisher stopped flying. The Jet management is likely to send a communique to employees on Monday on the pay issue. The airline’s pilots and engineers have said they may strike work from April 15 unless the airline “substantially” clears their January, February and March salary dues and gives a firm road map for the remaining amount. Meanwhile, the expression of interest “for change in control and management of Jet” was issued by SBI and SBI Caps early Monday and the last date for submission of EOI will be April 10.