JET AIRWAYS : IS IT TIME TO FLY OR NOT.

Jet won’t be able to operate beyond April if it doesn’t get the entire
promised debt funding of Rs 1,500 crore from its lenders in a week, its
top management has estimated internally, said a person aware of the
development.

The airline’s management also met lenders seeking clarity on the future
of a revival plan drawn up by the banks after the Supreme Court
quashed the RBI circular on debt restructuring rules for companies that
have defaulted on loans. No clarity or assurance has come from the
lenders, the person said.

Jet received loan funding of Rs 180-200 crore last weekend, all of which
has already been exhausted in paying salaries for December and
clearing jet fuel dues, said one person. No lessor has been paid yet.
“The lessors aren’t happy with crumbs in the form of payments… And
until more aircraft start flying there won’t be any cash generation,” said
the person.

Jet’s operating fleet consisted of 26 planes on Wednesday, down from

29 on Tuesday, said another person, who clarified that the aircraft were
grounded for maintenance and not due to notices from lessors. The
airline had a fleet of 124 in December
Jet didn’t respond to emailed queries till press time.

Employees haven’t got salaries from January to March. An update on

the status of salaries would be communicated on April 9, Jet’s chief
people office Rahul Taneja said in a communication to employees, while
confirming that March salaries would be deferred.

The airline, battling the worst phase of its 25-year existence, has been
forced to ground most of its planes due to unpaid dues to lessors or lack
of spare parts.

Jet has defaulted on Indian and overseas loans and vendor payments,
delayed salaries and laid off staff.

India’s second-biggest airline until January is currently the smallest, with

less than 15 planes flying local routes. Jet’s long-haul operations to
Amsterdam and London are less affected because the airline owns the
wide-bodied Airbus A330s and Boeing 777s deployed on these routes.

Jet’s lenders have sounded out TPG Capital to invest in Jet, people
aware of the plans said. Separately, the airline’s founders reached out to
commercial partner Delta Air Lines. TPG is said to have declined. A
spokesperson for the investor declined to comment.

Jet had submitted an operational revival plan to India’s aviation regulator

earlier this month, claiming it would have 75% of its fleet up by the end
of April. One person said the Directorate General of Civil Aviation
rejected the plan as too ambitious

Jet has now submitted a fresh plan, proposing to have 35 planes up

shortly. It is accepting bookings based on that plan.

Jet is likely to seek approval from the regulator to continue international

operations even though it flies fewer than 15 planes locally, one person
said. India allows an airline to fly international routes only once it has at
least 20 planes operating on domestic routes.

India’s aviation secretary Pradeep Singh Kharola has been cited as

saying that Jet’s eligibility to fly international “needs to be examined”.

Jet has said it “is operating a curtailed schedule with sufficient number of
aircraft, and is compliant with applicable guidelines”.
In his statement on Wednesday, Goyal said, “I have agreed to sacrifice
my every control and interest in the airline with the sole aim to ensure
the Jet family’s lasting welfare.”

Goyal had already announced his resignation as chairman and board

member of Jet. As per the latest revival plan, his 51% stake in the airline
was to have dropped to 25.5% and lenders led by State Bank of India
would take over 50.1%.

Goyal said he had “conscientiously taken some hard, personal

decisions” and had extended his “fullest respectful cooperation to the
consortium of Indian lenders”.

Meanwhile, uncertainty surrounds the revival plan for Jet proposed by

the lenders after the supreme court judgement.

The draft plan, presented recently to Jet by the lenders, was reviewed by
ET. Jet hasn’t made a formal announcement of the plan yet.

Under the proposed plan, partner Etihad Airways’ 24% stake would also
be halved. Goyal’s and Etihad’s shares would be transferred to a trust.
In the second stage, two new investors would be brought in, and Goyal
and Etihad would exit the airline.

RYSHELLE RODRIGUES
170701003
BAMC(A)