DUBAI: India’s Jet Airways on Monday grounded four aircraft as it failed to pay the lease for renting them, the latest in a series of financial challenges hurting the airline.
Jet Airways, once the number two airline in India, said that it is “actively engaged” with aircraft lessors, as it informed the National Stock of India that it is grounding aircraft “due to non-payment of amounts outstanding to lessors.”
Jet Airways did not elaborate on which routes will be affected or how long the grounding is for. It has, however, cancelled flights to and from Abu Dhabi for an indefinite period, due to what it described as “operational reasons.”
Abu Dhabi-based Etihad Airways, which owns a 24 per cent stake in Jet, confirmed on Monday the cancellation of “a number of flights” without citing details. It urged passengers to contact their travel agent or the Etihad contact centre for assistance.
It also said it is “working closely” with Indian lenders, Jet Airways, and “key stakeholders to facilitate a solution” for the illiquid airline.
With the additional four aircraft that are now grounded, Jet Airways has a total of 41 aircraft that are non-operational due to failure to pay rentals, according to reports from India Today.
The groundings come as cash-strapped Jet Airways seeks funds from investors, as it hasn’t seen profits in nine of the past 11 fiscal years. With over $1 billion in debt, the airline has also had to contend with a challenging 2018 amid competition from low-cost carriers and as both a weaker rupee and higher oil prices hurt earnings.
“The company is making all efforts to minimise disruption to its network and is proactively informing and re-accommodating its affected guests,” the letter to the Indian bourse said.
Share prices of the carrier have been on the decline since January 2018, falling to less than a quarter of where they stood.
Between early January and late September 2018, Jet’s share prices have dropped to Rs180 from Rs870. In January, Etihad Airways, which held a 24 per cent stake in Jet Airways, reportedly agreed to raise that stake to 49 per cent as the Indian carrier’s founder and chairman gives up majority control of Jet.
Reports from India’s Economic Times say that Jet Airways has a March 18 deadline to decide on an update for the airline’s turnaround, with an Etihad team reportedly expected to visit Mumbai this week to discuss the matter.
According to latest reports India’s government has asked state-run banks to rescue privately held Jet Airways without pushing it into bankruptcy, as Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election, two people within the administration.