India asks government banks to save Jet Airways

Dubai - The airline has accumulated more than $1 billion in debts

Indian government on Tuesday intervened in a last-ditch bid to stave off a possible crash landing of the debt-ridden Jet Airways by directing state-run banks to bailout the airline bedeviled by severe cash crunch, increasing number of grounded flights and a looming pilots' strike.
The government called an emergency meeting on Tuesday with Jet Airways management after Civil Aviation Minister Suresh Prabhu intervened and directed his staff to contain the crisis from deteriorating further. He also asked officials to continuously monitor the situation and ensure that public interest and safety are given top priority.
Determined to avoid massive layoffs in the run up to the crucial general elections next month, the government reportedly has urged the banks to throw the lifeline by swapping debt for equity, and taking stakes in the troubled airline.
The financial institutions tasked with bailout mission include SBI, Punjab National Bank and the 49 per cent state-owned National Investment and Infrastructure Fund.
Best by mounting debt to the tune of more than $1 billion, the full-service airline has had to delay payments to banks, employees, suppliers and even aircraft lessors, resulting the cancellation of hundreds of flights and grounding of more than 40 aircraft, comprising 42 per cent of Jet's fleet. Aviation analysts said a dithering by Naresh Goyal, the founder of the airline, on a key condition by creditors to dilute his stakes and his refusal to step down as chairman had been delaying the revival strategy of the carrier, in which Etihad owns a 24 per cent stake.
Industry pundits hope that the government, keen to avoid a repeat of the chaos sparked by Kingfisher Airlines' collapse in 2012, will not let another disaster, particularly before the elections. Kingfisher's bankruptcy led to huge job losses, while lessors lost millions of dollars and banks took massive write-downs. With a fleet of 119 planes, 25-year-old Jet Airways once controlled a sixth of India's domestic aviation market.
India's Directorate General of Civil Aviation said on Tuesday that Jet Airways is currently operating only 41 aircraft, just a third of its original fleet, and described the situation as fluid with the likely reduction of more aircraft in coming weeks. The DGCA said with the current fleet, Jet is likely to operate only about 985 flights a week or 140 flights a day - down from an average of about 650 flights a day in March 2018.
The regulator also said that Jet's pilots, cabin crew and ground staff who have reported any kind of stress should not be put on duty, and the airline should carry out regular maintenance of its aircraft even if they are currently grounded.
-   issacjohn@khaleejtimes.com