Jet Airways aircraft are seen parked on the tarmac at Chattrapati Shivaji International Airport in Mumbai on March 25, 2019. (PUNIT PARANJPE / AFP)
Jet Airways India’s fleet has shrunk by almost 90 percent as the cash-strapped airline struggles to find funds to operate, forcing the nation’s oldest surviving private airline to drastically curtail its scheduled flights amid a hunt for a new investor.
The carrier, once India’s biggest by market capitalization, was forced to ground 10 more jets after it failed to pay lease rentals on time, Jet said in a stock exchange filing Thursday.
Jet had already been forced by lessors to ground about 80 percent of its fleet prior to this.
If the size of its operational fleet drops below the 20 mark, Jet may be forced to halt all international operations, as Indian regulations demand that any domestic carrier has to have at least 20 operational aircraft in order to fly overseas
With the fresh groundings on Thursday, a Reuters calculation pegs the size of Jet's operational fleet at slightly over a dozen planes, down from 124 in January.
Jet Airways, which broke into the monopoly of state-run Air Indiain the early 1990s, had successfully managed to hold its own in a tough market before a slew of budget airlines started offering ultra-low fares about a decade back. The airline has since lost market share. Saddled with more than US$1.2 billion of bank debt, Jet is fighting for survival as it also owes money to lessors, suppliers, pilots and oil companies.
If the size of its operational fleet drops below the 20 mark, Jet may be forced to halt all international operations, as Indian regulations demand that any domestic carrier has to have at least 20 operational aircraft in order to fly overseas.
A company spokesman declined to comment on whether the size of Jet's operational fleet was now less than 20, only saying that it was still in the double digits.
The company suspended the traditionally lucrative, west-bound, long-haul international flights until Friday morning, a spokeswoman said late on Thursday. It had already stopped operations to several domestic and overseas destinations including Singapore.
Jet Airways’ creditors have extended a deadline for potential buyers to declare their interest in purchasing a controlling stake until Friday evening. Finding a buyer for Jet Airways is crucial to the legacy of Indian Prime Minister Narendra Modi as he faces an election that began April 11 after holding power for five years.
Lenders, led by State Bank of India (SBI), want a new investor to acquire a stake of up to 75 percent in the airline. Initial bids were to be submitted by the end of Wednesday, but SBI extended the deadline on Wednesday to Friday.
At least three sources familiar with the matter said the lenders had so far received four expressions of interest in the airline.
It is far from clear though, whether any of these will translate into bids and whether an investor will be identified in time to rescue the 25-year old carrier.
Jet has yet to receive a loan of about US$217 million from its lenders as part of a rescue deal agreed in late March, and many of its lessors that had earlier grounded planes have in the last two weeks begun to de-register these planes, further eroding value in the airline.
Once a plane is de-registered, the lessor can take it out of the country and lease it to other airlines.
Some fuel suppliers have also begun to tighten their fuel supply terms to the embattled carrier, piling additional pressure on Jet.
The airline, once India's leading private carrier, has been forced in recent months to cancel hundreds of flights to dozens of destinations both in India and overseas, leading to a customer backlash and a steady slide in its market share.
India’s aviation minister Suresh Prabhu has asked the top bureaucrat in his ministry to review issues related to the airline and take necessary steps to minimize passenger inconvenience and ensure safety, according to a Twitter post.
Jet Airways shares fell as much as 1.6 percent to 257 rupees in Mumbai on Friday. They had fallen 67 percent last year.
HONG KONG NEWS