October 29, 2018
Jet Airways has again defaulted, this time on the rental payments on its leased aircraft. The airline has been served a notice by the Airport Authority of India and the aircraft lessors over the delay in payments. The beleaguered airline is scouring for funding as it is struggling to keep up its expenses amid a stiff competition in the aviation sector, hike in fuel prices and declining rupee. The airline’s fleet comprises ATRs, Airbus, and Boeing jets. Out of its total fleet of 124 aircraft, as many as 108 are on lease.
Jet Airways is in desperate need of fresh funds worth over $1 billion. The airline has said it is implementing a turnaround strategy but nothing seems to have worked so far. In fact, the airline has been delaying the payment of salaries to its employees every month since August, which is putting an additional burden on it. Now, the payment default on aircraft rentals could force it to return five-seven older Being 737 planes to resolve the disputes, reported Business Standard.
However, industry experts suggest returning aircraft won’t be an easy deal as mostly it depends on lessor’s discretion. Besides, the Naresh Goyal-led airline is trying to sell its stake but all talks have failed so far. The airline reportedly approached the Tata Group for over 25 per cent stake sale but the salt-to-software conglomerate wanted a complete control over the airline, with the exit of its current promoters, including airline owner Naresh Goyal’s family. Jet Airways Chairman Naresh Goyal and his wife currently own 51 per cent of the stake in the airline, while UAE-based Etihad Airlines owns a 26 per cent stake in the company.
The cash-strapped airline has now reportedly knocked on the door of India’s richest businessman, Mukesh Ambani. Goyal has asked Mukesh Ambani in his personal capacity but Reliance Industries’ Chairman is yet to take a call on Goyal’s offer, reported Mint. Besides, the airline is also on a firing spree to contain its expenses. Jet Airways recently fired as many as 35 employees, including some senior-level executives who were working in its crucial in-flight departments, engineering, and security and sales, to curtail costs amid the severe cash crunch.
Significantly, a decade back, Jet Airways had announced sacking of 1,900 employees, including 800 unconfirmed and under-probation employees, across all operations. This led to an uproar and chairman Goyal was not only forced to take back all the sacked employees overnight but also had to apologise.