India’s Jet Airways grounds three quarters of fleet as it awaits bailout funds

Jet Airways’s operational fleet stood at 28 airplanes as of Wednesday versus 119 planes last year. (Reuters)
Updated 03 April 2019
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India’s Jet Airways grounds three quarters of fleet as it awaits bailout funds

  • Jet Airways struck a deal earlier this year with State Bank of India and other lenders to escape bankruptcy
  • Jet’s operational fleet stood at 28 airplanes as of Wednesday, versus 119 planes last year

NEW DELHI: India’s Jet Airways has been forced to ground more than three quarters of its fleet after failing to pay lessors, as the debt-laden carrier struggles to secure bailout funds promised by state-run banks.
Jet struck a deal earlier this year to escape bankruptcy under which State Bank of India (SBI) and other lenders were to pump in $218 million and temporarily own a majority stake in the airline. But it has not got any of the funds so far and has not paid its employees for March, said a person with direct knowledge of the matter.
Once India’s leading full-service airline, Jet was founded 25 years ago by Naresh Goyal at a time when state-run carrier Air India was the only real formidable opponent. In recent years, however, Jet has struggled to compete with low-cost carriers such as IndiGo and SpiceJet that now dominate Indian skies.
Jet’s operational fleet stood at 28 airplanes as of Wednesday, a company spokesman told Reuters, versus 119 planes last year.
At least 69 aircraft have been grounded due to money owed to lessors, showed stock exchange filings by Jet, while the remainder are out of service for maintenance.
Some lessors with direct knowledge of the matter said Jet had told them it would pay for one month’s rental and maintenance by the end of last week, but no payment had been received.
“We already have five to six months of delinquencies and we were promised just one month and even that hasn’t been paid. This is very disappointing,” said one of the people, who declined to be identified due to the sensitivity of the matter.
Jet did not respond to specific queries on lessor and salary payments but said in a statement that the airline has informed the aviation regulator it is operating a curtailed schedule.
The Jet rescue plan itself has come under a cloud. It was based on a directive issued by the country’s central bank last year but India’s top court quashed that directive on Tuesday.
SBI and Jet did not respond to requests for comment on the court ruling. But some such as Madhukar Ladha, an equity analyst at Mumbai-based firm HDFC Securities, did not see Jet’s rescue package being in peril as the deal was already agreed.
After the bailout was announced, Jet told India’s aviation regulator it would not ground any more planes and would fly 40 more aircraft by the end of April, taking its operational fleet to 75 planes.
But late on Tuesday, Jet said it grounded 15 planes.
With a smaller operating fleet, Jet has given pilots and cabin crew the option of flexible working days and taking extended leave with or without pay, showed a note to staff reviewed by Reuters.
Even as the aircraft groundings are currently impacting Jet’s operations, the airline needs to rationalize its fleet and focus on profitable routes, said HDFC Securities’ Ladha.
“The situation remains precarious,” he said.


India suspends Kashmir border trade with Pakistan

Updated 19 April 2019
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India suspends Kashmir border trade with Pakistan

  • Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries
  • India said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency”

NEW DELHI: India has suspended trade across its disputed Kashmir border with Pakistan, alleging that weapons and drugs are being smuggled across the route, as tensions simmer between the nuclear-armed neighbors.
Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries and brought the two countries to the brink of war with cross-border air strikes.
On Thursday, India’s government, which is in the middle of a tough national election, said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency.”
It also said many of those trading across the Line of Control, which divides Kashmir into zones under Indian and Pakistani control, had links to militant organizations.
The home ministry said trade would be suspended until a stricter inspection mechanism is in place.
The cross-border trade is based on a barter system, with traders exchanging goods including chillies, cumin, mango and dried fruit.
It began in 2008 as a way to improve strained relations between New Delhi and Islamabad, who have fought two of their three wars over the disputed region.
The Indian Express newspaper said Friday that 35 trucks carrying fruit traveling from the Indian side of the border had been stopped after the government order.
Trade on the border has been suspended before, including in 2015, when India accused a Pakistani driver of drug trafficking.
The latest move comes after India withdrew “Most Favoured Nation Status” — covering trade links — from Pakistan after the February attack, which was claimed by the Pakistan-based Jaish-e-Mohammed Islamist group.
Islamabad has denied any involvement in the attack.
India’s Hindu nationalist Prime Minister Narendra Modi has made national security a key plank of his re-election campaign, pointing to the recent flare-up of violence as he battles the center-left opposition Congress party.
He is seeking a second term from the country’s 900 million voters in the mammoth election which kicked off on April 11 and runs till May 19. The results will be out on May 23.