Nikita Vashisht
Moneycontrol News
Lessors of beleaguered Jet Airways have offered 50 of the airlines’ new generation Boeing 737 aircraft to budget carrier SpiceJet even on short-term leases of up to three years, Moneycontrol has learnt.
Top sources in SpiceJet told Moneycontrol that the lessors have offered the aircraft on dry lease in order to avoid grounding of these planes in wake of ailing financial health of Jet Airways. A dry lease is a situation where the lessor provides aircraft to an airline without any crew or ground staff member.
SpiceJet is in need of 12 new aircraft after the aviation safety watchdog, Directorate General of Civil Aviation (DGCA), decided to ground Boeing 737 Max planes owing to safety concerns. The aircraft model was involved in two fatal accidents within a span of six months killing 346 people in all.
The budget carrier has, so far, received two replacements on lease from a Turkish Airline, sources said.
Lessors of Jet Airways, sources say, fear payment uncertainty owing to the financial crunch in the company.
Jet Airways is reeling under a debt of over Rs 8,000 crore has been defaulting on loan re-payment and interest thereof. It has grounded a total of 60 aircraft so far and is operating with half its fleet. This has led to numerous flight cancellations, consequently leading to soaring airfares.
India's second-largest carrier, which is facing is worst ever debt crisis in 25 years, has delayed payments to its pilots, suppliers and lessors for months and defaulted on loans subsequent to an intense competition, weak rupee and rising fuel costs.
Union minister for civil aviation, Suresh Prabhu, directed DGCA to hold an “emergency meeting” on grounding of flights, advance booking cancellations, refunds and safety issue of the airline.
According to letter by Jet Aircraft Maintenance Engineers Welfare Association (JAMEWA), the body was seeking DGCA’s intervention in the recovery of their salary dues as the non-payment was “affecting their psychological condition” which, in turn, was a "risk" to the airline's flight operations. The letter, however, was later withdrawn by the body.
Jet Airways was earlier looking at a resolution plan which required an infusion of over Rs 750 crore in the airline. Its last resort, the partner airline Etihad Airways, has decided against infusion of any fresh capital as it won’t be allowed to become a majority stakeholder due to Foreign Direct Investment (FDI) conditions.
Media reports have suggested that Etihad Airways was not willing to accept the proposed resolution plan for Jet Airways and was offering its top lender State Bank of India (SBI) the option to acquire its 24 percent stake at Rs 150 per share. Etihad, which owns 24 percent of Jet Airways, may also eventually look at an exit, reports suggested.
“If Etihad backs out, Jet Airways would have to look for a new partner in a fortnight. The Indian airline, which defaulted on loans in December, has 15 days before it is liable to be referred via a case to the National Company Law Tribunal (NCLT) under the Insolvency & Bankruptcy Code (IBC),” reports said.
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