National carrier Air India has written to the lenders of Jet Airways asking if it can fly five of Jet s grounded Boeing 777 aircraft on international routes. Jet has suspended operations after bankers refused additional credit to the cash-strapped airline.
In a letter to Jet s lenders headed by State Bank of India (SBI), Air India has offered to operate the Mumbai-London, Delhi-London, Mumbai-Dubai, Delhi-Dubai and Delhi-Singapore sectors. Jet owns 10 wide-body Boeing 777-300 ER planes, along with a few Airbus A330s, which it operated on medium and long-haul international destinations
Air India chairman and managing director Ashwani Lohani said the state-owned carrier would operate the aircraft on wet or dry lease agreements. Subject to approvals and financial viability, we can examine the possibility of taking five B777s on dry/wet lease basis from SBI, the terms of for which can be mutually thrashed out, Lohani said in an letter addressed to SBI chairman Rajnish Kumar.
Meanwhile, banks on Thursday expressed hope of finding a suitor for the beleaguered airline.
A day after it refrained from infusing `400 crore to keep Jet flying, the consortium of banks on Thursday said finalising a potential investor would be the best way forward for Jet.
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 April 16, a statement by lenders said.
In a parallel development, the civil aviation secretary on Thursday met heads of domestic airlines and airport operators to discuss a spike in fares due to grounding by Jet and allocation of its landing slots to other carriers.
Airports Authority of India chairman Guruprasad Mohapatra said the ministry has formed a committee to allocate Jet’s landing slots across all domestic airports. Jet’s slots are critical for potential bidders. There is a mad rush for prime slots at major airports. The committee will look for uniformity in allocation of slots like what will be the duration of this arrangement, whether historicity will be protected for future allocation, Mohapatra told FE.
Banks on April 17 rejected a request from Jet Airways for emergency funds, compelling the airline to ground operations later in the evening. The airline had been carrying out a curtailed operations for the last several weeks and last week suspended its international operations due to cash crunch. By Tuesday, its once 119-aircraft strong fleet had come down to just 5, underlining that without any immediate fund infusion the airline will not be able to continue for more than a day.
The resumption of operations will depend on the success of the bank-led resolution plan. SBI Caps, which is overseeing the sale transaction, has issued bid documents to four shortlisted bidders Jet’s equity partner Etihad Airways, India’s sovereign wealth fun NIIF, US-based TPG Capital and Indigo Partners. The lenders are offering to sell 31.2-75% stake in the beleaguered carrier.
Jet, which made losses of Rs 3,208 crore in the nine months to December, 2018 had a gross debt over Rs 7,654 crore in December 2018.
Trouble at the airline began last August when it asked employees to take up to 25% salary cut to save costs. Jet has not paid employees March salaries; pilots have not been paid since January while dues to other employees aircraft maintenance engineers and senior management also remain unpaid. The airline has not paid its vendors, lessors and also has dues to oil marketing companies.
Under the banks-led debt resolution plan approved by the Jet board on March 25, lenders were to acquire an equity stake in the airline and infuse Rs 1,500-crore. The carrier s founder and promoter Naresh Goyal and his wife Anita Goyal, accordingly stepped down from the board. However, the lenders did not infuse the funds as they demanded more collateral.
At its peak, Jet operated over 600 daily flights serving international destinations like London, Paris, Amsterdam, Manchester in Europe, and Toronto, Hong Kong and Bangkok, apart from the Middle East.
With operations at Jet temporarily shut, it will be difficult for domestic carriers to fill the gap as the low cost airlines in India SpiceJet, IndiGo and AirAsia India and also full service carrier Vistara, do not operate widebody aircraft used for flying international long-haul flights of over six hours. Air India is now the only carrier with bigger aircraft and pilots to fly these.