April 11, 2019 / 4:10 PM / 2 months ago

India's Jet Airways cancels some long-haul flights as it grounds more planes

NEW DELHI (Reuters) - India’s beleaguered Jet Airways said on Thursday 10 more of its planes had been grounded over unpaid dues to leasing companies, pushing it to the brink of shutdown and jeopardizing hopes of a new investor rescuing the carrier.

FILE PHOTO: Jet Airways aircraft are seen parked at the Chhatrapati Shivaji Maharaj International Airport in Mumbai, India, March 26, 2019. REUTERS/Francis Mascarenhas/File Photo

Jet, which had already been forced by lessors to ground about 80 percent of its fleet prior to this, also said it had canceled all west-bound overseas long-haul flights until tomorrow morning.

Thursday’s move comes even as Jet’s lenders still try to seek expressions of interest in the debt-laden carrier from potential investors interested in turning around the airline.

Jet airways has proactively canceled all west bound long haul flights from India from tonight until tomorrow morning, a company spokesman said.

With the fresh groundings on Thursday, a Reuters calculation pegs the size of Jet’s operational fleet at slightly over a dozen planes, down from over 120 aircraft last year.

Saddled with more than $1.2 billion of bank debt, Jet is fighting for survival as it also owes money to lessors, suppliers, pilots and oil companies.

If the size of its operational fleet drops below the 20 mark, Jet may be forced to halt all international operations, as Indian regulations demand that any domestic carrier has to have at least 20 operational aircraft in order to fly overseas.

A company spokesman declined to comment on whether the size of Jet’s operational fleet was now less than 20, only saying that it was still in the double digits.

Lenders, led by State Bank of India (SBI), want a new investor to acquire a stake of up to 75 percent in the airline. Initial bids were to be submitted by the end of Wednesday, but SBI extended the deadline on Wednesday to Friday.

At least three sources familiar with the matter said the lenders had so far received four expressions of interest in the airline.

It is far from clear though, whether any of these will translate into bids and whether an investor will be identified in time to rescue the 25-year old carrier.

Jet has yet to receive a loan of about $217 million from its lenders as part of a rescue deal agreed in late March, and many of its lessors that had earlier grounded planes have in the last two weeks begun to de-register these planes, further eroding value in the airline.

Once a plane is de-registered, the lessor can take it out of the country and lease it to other airlines.

Some fuel suppliers have also begun to tighten their fuel supply terms to the embattled carrier, piling additional pressure on Jet.

The airline, once India’s leading private carrier, has been forced in recent months to cancel hundreds of flights to dozens of destinations both in India and overseas, leading to a customer backlash and a steady slide in its market share.

Reporting by Aditi Shah in New Delhi Chris Thomas in Bengaluru; Additional reporting by Promit Mukherjee in Mumbai; Editing by Susan Fenton and Euan Rocha

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