Naresh Goyal, chairman of Jet Airways India Ltd. (Photographer: Vivek Prakash/Bloomberg)

Jet Airways Defaults Again Even As Goyal Assures Staff Of Resolution

Jet Airways (India) Ltd. on Monday defaulted on payment to its debenture holders—the third since January—even as Chairman Naresh Goyal assured the employees of a resolution, but said “more time is needed to clinch a bailout”.

Goyal, in a letter to his 16,000 staff, which comes ahead of the domestic pilots body National Aviator’s Guild annual meeting in Mumbai, said talks with the airline’s strategic partner Etihad Airways and lenders led by State Bank of India Ltd. are going on.

Though Goyal sought more time to clinch the deal, he did not offer a timeline for it.

The U.A.E. flagship carrier owns 24 percent in Jet Airways and its board is considering a draft agreement as part of a debt-recast plan being mooted by the airline's lenders.

Earlier, Jet Airways informed the exchanges that “the payment of interest due on March 19 to the debenture-holders will be delayed owing to temporary liquidity constraints”.

This is the third time the airline is defaulting this year. Earlier it failed to meet its payment obligations towards the domestic banks’ loans in January as well as on part-repayment of its external commercial borrowings due to liquidity crunch earlier this month.

The airline, which has a debt of over Rs 8,200 crore, did not specify what is the quantum of interest due on Tuesday.

Also read: Jet Airways’ Pilots To Hold Annual Meeting On March 19

On Feb. 14, its board had approved a bank-led resolution plan, whereby the SBI-led consortium of lenders will become the largest shareholders in the airline and Goyal would exit the management as the chairman and board member.

If the resolution plans goes through, banks would convert a part of their debt into 11.4 crore shares for a consideration of Re 1 as per the RBI norms.

Last week, SBI sounded hopeful of reaching an early solution by this week.

In his letter to the employees, Goyal said, “the situation, though complex, has my personal attention towards an early resolution...the complexity of the process though has led to some delays and will require further time to conclude”.

“Once again I assure you that I am personally committed to have the resolution process completed as soon as possible and restore the much-needed stability to our operations at the earliest,” he said.

Since a larger number of planes from its over 100-fleet are grounded leading to drastically curtailed operations, the airline is struggling to prevent a nose-dive somehow. Of this as many as 41 aircraft are grounded for non-payment of lease rentals to lessors.

Also read: Jet Airways Grounds Four More Planes Due To Non-Payment Of Lease Rentals

Following this, the airline has indefinitely suspended its operations from Abu Dhabi, one of its two global gateways the other being one in Amsterdam.

Jet Airways has been struggling to mop up cash to carry out operations. The acute liquidity crunch has forced it to ground aircraft, shut down stations and delay salary payments to its pilots and engineers along with other senior staff.