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Last Updated : Jan 14, 2019 03:15 PM IST | Source: Moneycontrol.com

Jet Airways' 18 B-737 aircraft engines grounded in Singapore over $125m in unpaid dues: Report

ST Engineering's MRO is demanding $125-150 million to release these engines that have been stuck for months

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Beleaguered airline Jet Airways landed in a spot of trouble in Singapore as a maintenance, repair and overhaul (MRO) unit held back 18 of its CFM56 engines that power the bulk of its fleet of Boeing 737 aircraft because of unpaid dues, Business Standard reported.

ST Engineering's MRO is demanding $125-150 million to release these engines that have been stuck for months, sources told the paper. The ailing Jet has defaulted on many vendors and lease repayments, which has led to the grounding of many planes. The airline has 123 planes, 86 of them are Boeing 737. Five of the latter are new 737 Max, powered by CFM Leap-1B engines.

Jet Airways has been able to function somewhat seamlessly because it has a big fleet and many spare engines, the report said. More disruption could be on the way for the airline as promoter Naresh Goyal is unable to strike deals to raise funds. Till March 2018, the airline owed Rs 1,700 crore.

The MRO in Singapore restores damaged engines and replaces faulty ones. Components of the engine need to be replaced after 20,000-30,000 flight cycles.

When Jet had set up in 1993, ST Engineering's MRO had provided components for its aircraft. MRO's responsibilities were extended to engine maintenance in 2007, the report said.

The two parties signed a power-by-the-hour agreement in 2010, under which Jet was required to pay a monthly fee to cover all maintenance-related expenses. The agreements were renewed in 2015 and new deals were put in place that covered all the Boeing 737 aircraft. The contract value rose to $700 million from $350 million. Jet has not paid these dues on time for a while and they are piling up, the report stated.

This is not the first time such a thing has happened. Jet had been unable to pay the dues in 2012 to the MRO and the payment was completed only after Etihad Airways acquired 24 percent stake in the airline.
First Published on Jan 14, 2019 09:51 am
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