Hours after announcing no-fly call, Pilots of cash-starved Jet Airways, on Monday appealed to the State Bank of India (SBI) to release funds of worth Rs 1,500 crore which was proposed to be infused in the ailing carrier as a part of its debt-restructuring plan last month.
The SBI-led group of lenders had last month taken control of the airline and agreed to provide an immediate funding support of Rs. 1,500 crore.
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The union of more than 1,100 pilots as members, National Aviator’s Guild (NAG) also sought help from Prime Minister Narendra Modi in saving 20,000 jobs at stake. The appeal comes on a day when the management of the airline is meeting the lenders.
Earlier on Sunday, NAG had announced that its 1100 members would stop flying from April 15 in protest against “non-payment of salaries since January”. The Prime Minister’s Office (PMO) had convened an urgent meeting on Friday to discuss the crisis after the airline could operate only 11 aircraft, leaving passengers stranded at various domestic and international airports.
Founded in 1974, Jet Air was a powerful General Sales Agents (GSA) that represented as many as 17 global airlines before it spawned Jet Airways in the 1990s. According to its website, its current interests, includes Jet Air Tours and Jet Fleet, a car rental service. Jet Fleet describes Jet Air as an aviation service group that includes Jet Airways as a partner.
Currently, Jet Airways is operating only 6-7 planes, dozens of others were seized by creditors in recent weeks. Pilots, engineers, and ground staff who have not been paid for three months and have said they will call for a strike if the banks do not inject emergency funds.
In 2012, Kingfisher Airlines was plagued with the same set of troubles. In case of Jet Airways, its stock fell 10% in six months before lenders announced on March 25, 2019, the proposal to convert debt into equity. Since March 25, the stock has gained 2.3%. In fact, on a one-year forward basis, Jet’s stock is trading at just a 23% discount to the shares of market leader IndiGo (NSE 3.27 %).
Jet has accumulated losses of Rs 2,700 crore in the first-nine month of FY19. Lenders have been prudent on giving temporary credit to the airline, given the vulnerable state of its operations. Currently, the airline is sitting on a massive pool of debt to the tune of over Rs 8,000 crore. The fate of the airline hangs in the balance as it has hardly any neither pilots nor aircraft left to sustain daily operations. Not only the airline has been failed to pay full salaries to its employees for months but also defaulted on several payments.
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Lead lender SBI has been looking for a new investor in the airline to acquire up to 75% stake in Jet Airways. The lenders have reportedly decided not to release any more funds till an investor is identified.
Not only the airline but also the journey over the past four-five months have been extremely hard for ground staff at the airline, they have been humiliated by passengers over the cancellation of flights besides facing financial hurdles. They also blame the management for failing to pay salaries that affected the financial wellbeing of several employees.