The crisis at Indian carrier Jet Airways continues to spiral after the cash-haemorrhaging airline grounded a further six aircraft yesterday (Tuesday) leading to a raft of flight cancellations and fuelling speculation of its possible future demise.
The company which employs more than 20,000 people has been struggling under the weight of debts that total more than $1 billion and it has delayed payments to banks, employees, suppliers and even aircraft lessors.
Jet Airways operates a fleet of 119 aircraft with a further 250 on order and serves 600 domestic and 380 international routes but has now grounded more than 50 aircraft due to defaults on lease payments.
In a letter to the National Stock Exchange of India yesterday, company secretary Kuldeep Sharma said the additional six aircraft have been grounded “due to non-payment of amounts outstanding to lessors under their respective lease agreements”. He added that Jet Airways was trying to “improve its liquidity”.
There are no signs of the crisis abating and pilots’ organisation National Aviators Guild has reportedly warned its members would stop flying if their salaries were not paid by the end of March.
Meanwhile, industry regulator the Directorate General of Civil Aviation has asked the airline to refund passengers, or provide alternatives, if their flights are cancelled.
And according to reports, the Jet Aircraft Engineers Welfare Association (JAMEWA) also said it had been hard for engineers to meet their own financial commitments, adversely affecting their “psychological condition”.
Etihad Airways owns 24 per cent of Jet Airways and had previous reportedly agreed to put more cash into the ailing carrier and take control of the airline but the deal apparently didn’t happen as founder Naresh Goyal refused to step down as chairman. Reports are now circulating that Etihad wants to sell its stake.
The BBC also reports that the Indian government has asked state-run banks to step in and save Jet Airways – to swap debt for equity and take stakes in the carrier.
Jet Airways also said yesterday in a statement that it was “actively engaging” with lenders to secure fresh liquidity and wanted to “minimise disruption”.
India is one of the fastest growing aviation markets in the world and is forecasted by IATA to be the third largest country market by 2025 after the USA and China.
However, with this strong growth, there is fierce competition as low-cost airlines like SpiceJet and Indigo have expanded fast and moved into international markets and flooded the marketplace with low fares running on a low cost operating base, leaving Jet and fellow cash-strapped national carrier Air India which also has huge debts struggling to compete.