Most Indian airlines are in talks with lessors to take over deregistered aircraft of Jet Airways (India) Ltd. as the ailing carrier stares at a full shutdown.
Since early March, eight deregistered planes of Jet Airways have been inducted by other airlines, and three more are expected this week, Pradeep Singh Kharola, secretary at the Ministry of Civil Aviation, said without giving details of the airlines.
“We estimate 10 more planes to be inducted in May to deal with the peak demand (during holiday season). Some airlines are mulling inducting additional planes on wet lease,” he said after a meeting with airlines on rising airfares during the summer season when travel picks up due to school holidays.
Airfares are mostly rising as Jet Airways, which has a debt of more than Rs 10,000 crore, pulled out of capacity from most routes as non-payment to lessors has led to grounding of planes.
“Five planes of Jet Airways are flying as of now. Civil Aviation Ministry officials will again meet the airlines on April 18 to take stock of the capacity expansion and fare surge,” Kharola said.
The Directorate General of Civil Aviation identified 40 high-density routes vulnerable to a surge in ticket prices, of which 10 are already facing a spike, Kharola said. The regulator, according to him, told the airlines to bring fares to a lower rate as the vacation crowd will be flying.
BloombergQuint had earlier reported that SpiceJet Ltd. is also looking to lease about a dozen planes from Jet Airways’ lessors as India’s second-largest carrier looks to augment its capacity after grounding of Boeing 737 Max 8 aircraft by the aviation regulator.
Empty Slots
About 90 percent of Jet Airways’ slots are vacant and are re-allotted temporarily by airports, Kahoral said without divulging further details of the slots that will be re-allotted.
Jet Airways has 209 slots, combining domestic and international, an official from the Ministry of Civil Aviation told BloombergQuint on the condition anonymity. Of these, more than 25 slots have been allotted to other airlines, the official said.
Jet Airways Seeks Lifeline
Jet Airways today sought Rs 400 crore in emergency funding from its lenders, according to Kharola.
“Jet Airways is still negotiating with banks. They sought an emergency funding today, but banks are yet to take a call,” he said. “Banks have a resolution plan and its implementation will continue. Under this resolution plan, expressions of interest have been received and they are being assessed.”
The lenders have invited expressions of interest for a stake in the struggling carrier. Six investors, including Etihad Airways PJSC, have already submitted initial interest. But an expression of interest is not binding, and bidders are free to exit the process. BloombergQuint reported earlier that these investors were informed about Jet Airways’ current status and they expressed concern if it can actually be turned around.
State Bank of India, the lead lender to Jet airways, however, said the bidding process for the sale of equity in the carrier is being run by SBI Caps and is being vetted by a legal team. “The prospective bidders will be drawn up by SBI Caps shortly,” the bank said in a statement.
The lenders won’t take the airline to the bankruptcy court, newswire PTI reported quoting a top government official. The funding for Jet Airways is likely to come through as lenders are discussing ways to revive the crisis-hit carrier, the official said without giving details of how long it will take for the banks to inject funds.
India’s first private sector full-service carrier is in dire need of funds to pay lenders, employees and lessors. The airline was waiting for Rs 1,500-crore debt support from lenders. But bankers told BloombergQuint on the condition of anonymity that they await a direction from the government as they fear prosecution later.
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