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India's Jet extends cancellations after lenders fail to release funds
[MUMBAI] India's stricken Jet Airways appeared to be edging closer to collapse Monday after lenders failed to take a decision on whether to release crucial funds to keep the debt-laden carrier flying.
Thousands of passengers have been stranded in recent days after the airline, which has debts of more than US$1 billion, cancelled all international flights as it cannot pay its bills.
Jet CEO Vinay Dube said in an email to staff Monday that the cancellation of all international flights was being extended to Thursday because an emergency cash injection had not yet been made available.
"As you are aware, we have been working with the lenders to secure interim funding for our operations. The interim funding has not been forthcoming thus far..." he wrote.
Mr Dube added that the board of Jet would meet on Tuesday to discuss "the next steps forward".
The airline has only seven jets left after dozens of others were seized by creditors in recent weeks.
Pilots, engineers, and ground staff who have not been paid for three months have said they will strike if the banks do not inject emergency funds.
They had planned to strike from Monday but postponed the action until after the bankers' meeting.
The State Bank of India-led lenders took control of Jet last month, pledging to give US$218 million of "immediate funding support" as part of a debt resolution plan.
But most of the funds have not been released and Jet, which is now operating a skeleton service, needs the money desperately or could go bust within days, Indian media reports say.
The lenders met for several hours on Monday but failed to agree on how to proceed.
SBI said in a statement that "necessary support to facilitate the (debt resolution) process is being extended by the banks in the consortium".
"Cooperation by and support from all the other stakeholders will be the key to the success of the process," it added.
Jet has been in a tailspin for months. All of its international flights have been suspended since late Thursday, with Europe and North America particularly badly hit.
Hundreds of staff protested in New Delhi and Mumbai over the weekend demanding to be paid and calling for the company to be rescued.
The Mumbai-based firm has defaulted on loans and repeatedly failed to pay staff and lessors in recent months.
The SBI-led consortium is trying to find a buyer for Jet, which was until recently India's second-biggest airline by market share.
A deadline passed Friday for prospective bidders to express an interest in acquiring a 75 per cent stake in the carrier.
Etihad Airways, which owns a 24 per cent stake, has submitted an expression of interest to buy a controlling stake of up to 75 per cent, according to media reports.
Naresh Goyal, who founded the airline but quit as chairman last month, has also lodged a bid, as have several private equity groups, newspapers said.
Prime Minister Narendra Modi's government, for whom a collapse of Jet would be a blow as it seeks a second term in a national election, convened a crisis meeting on Friday evening.