India’s Jet Airways was in deepening difficulty this week as it was forced to ground 23 aircraft or one fifth of its fleet and cancel 100 flights a day.
A Jet Airways spokesman said the airline had “undertaken pro-active adjustments to its flight schedule” but insisted: “The company has a defined plan for growth.”
However, reports in India suggested the carrier had grounded 45 aircraft.
Jet Airways’ major shareholders and creditors have been locked in talks on a $1.2 billion rescue since mid-February following months of uncertainty about the airline’s survival.
Staff have gone unpaid, in some cases since last August. Jet defaulted on loan repayments to its banks in December, and aircraft leasing companies have been progressively grounding the airline’s fleet over non-payment of leases.
A strike by pilots over unpaid wages, due to begin on March 1, was only averted due to the conflict between India and Pakistan over Kashmir.
To make matters worse, Air India cancelled an agreement to rebook stranded Jet passengers on its flights last week
A consortium of lenders, led by the State Bank of India, appeared ready to take control of the airline in return for writing off Jet’s $1.2 billion debt last month. Yet the deal has still to be finalised.
Jet Airways founder Naresh Goyal retains a controlling stake in the airline, with Abu Dhabi-based Etihad holding 24%.
Goyal told employees last week that he is willing to make “any sacrifice” to rescue the airline. He promised an update on the rescue plan by March 18.
Jet denied reports that Goyal had agreed to step down, but this is widely seen as a condition of Etihad agreeing to provide any funds.
Goyal also issued a joint statement with Etihad chief executive Tony Douglas last week saying the pair were “working towards the finalisation” of the plan.
India’s airlines remain beset by financial problems despite the fast-growing domestic market. Air India is awaiting a government bailout following a failed privatisation attempt.
India’s Economic Times reported air fares in the country soaring “by up to 60%” amid the flight cancellations by Jet and by budget carrier IndiGo which has expanded faster than it can recruit pilots.
The Indian government remains keen to avoid a collapse by Jet Airways, India’s second-biggest carrier, in the run-up to a general election this spring.
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