Jet Airways Looks To Restore Its Fleet Size With New Cash From Lenders
With lenders providing a lifeline, Jet Airways (India) Ltd. expects to fly more aircraft in the next three to four weeks after its fleet size shrank to nearly a fourth as it failed to pay lessors.
The airline, which had close to 120 aircraft in the December-ended quarter, saw its fleet size contract to just 33. Financial troubles had forced it to ground 54 planes.
As part of the resolution plan, the lenders will now provide an immediate interim support of Rs 1,500 crore to Jet Airways, according to its statement. The company will use funds to pay lessors, vendors, creditors and employees in a phased manner. The move will see Jet Airways re-deploy several of its grounded planes.
The cash-strapped airline is now eyeing to make 75 percent of its earlier fleet operational. “We see our fleet restoring to 65-75 percent of the original fleet in the next three to four weeks,” Amit Agarwal, deputy chief executive officer at Jet Airways, told BloombergQuint over the phone before the company released a formal statement. “Except for some of the planes undergoing repairs we should be able to bring back aircraft fast. We are in touch with lessors and original equipment manufacturers.”
Jet Airways board meet today saw its promoter Naresh Goyal and his wife Anita Goyal step down from the board. Kevin Knight, the lone nominee of Etihad Airways PJSC, also resigned from the board.
The board of the airline, as part of the resolution plan finalised by its lead banker State Bank of India, has approved providing Rs 1,500 crore as immediate liquidity in the form of debt.
The immediate inflow of funds from the lenders will help unlock the locked cash stuck, said Agarwal. “We have additional assets to provide security for these funds.”
The company will be submitting its summer schedule to the Directorate General of Civil Aviation for approval, Agarwal said, adding that the airline will see additional seats being added within the next two days. “Summer schedule has high demand. The focus will be to ensure higher utilisation, including restoring some of the international routes.”
The lenders will be setting up an interim management committee comprising members from Jet Airways’ management and representatives of the lenders. McKinsey & Co. will advise the banks for the same.
Lenders took control of the beleaguered airline by acquiring 50.1 percent stake at Re 1, reducing Goyal’s and Etihad’s stake nearly by half to 25.5 percent and 12 percent respectively.