New Delhi: “Government is closely” monitoring the situation at Jet Airways even as negotiations to save the financially beleaguered airline continue, Union Minister Suresh Prabhu said in an interview.
The government’s stand assumes significance as lenders negotiate with key stakeholders of the airline to take forward the proposal to convert a part of the company’s loans into shares and iron out differences over the plan.
Commerce and Industry and Civil Aviation Minister Prabhu told IANS: “The Government is closely watching the situation”.
When asked about any requisite approvals that the proposed deal between bankers, management and shareholders including Etihad Airways might require from the ministry, he said that appropriate action will be taken, if required.
Mandate wise, the ministry is responsible for the safe operations of the airline and to monitor, if the substantial ownership and effective control norms are being met.
The minister added that the government has set proper mechanisms to monitor airline’s adherence to flight schedules as passed by the DGCA.
Currently, owing to its strained financial position, the airline has been forced to ground over 25 aircraft due to non-payments of dues.
This has effected over 85 flights.
To relive the airline of its financial constraints, the State Bank of India (SBI), which leads a consortium of lenders is negotiating with key stakeholders of the airline to take the proposal — Bank-led Provisional Resolution Plan — forward.
Last month, Jet’s shareholders had approved the BLPRP, as part of which, public sector lenders will become the largest equity owners of the airline, virtually making it a nationalised carrier.
The shareholders’ approval came after Jet Airways Board approved the BLPRP on February 14.
“The BLPRP currently estimates a funding gap of Rs 8,500 crore (including proposed repayment of aircraft debt of Rs 1,700 crore) to be met by appropriate mix of equity infusion, debt restructuring, sale or sale and leaseback or refinancing of aircraft, among other things,” the company said in a regulatory filing to the BSE on February 14.
As part of a provisional resolution plan, the airline’s Board has agreed to allot 11.4 crore shares at an aggregate value of Re 1 to the lenders’ consortium led by the State Bank of India, according to the airline.
Recently, Jet Airways reported Rs 587.7 crore as standalone net loss for the third quarter ended December 31, 2018. It had reported a net profit of Rs 165.25 crore during the year-ago period.
The private carrier on January 1 defaulted in paying interest and installments on loan repayments due to banks, following which rating agency ICRA downgraded both short and long-term credit facilities of the airline.