Jet Airways Grounds Four Aircraft Over Lease Payment Defaults


Finally, the day has come when Jet Airways has to ground 4 of its machines.

Jet’s 2019 timeline so far….

  • Jan 2 – The airline says it has delayed payment to a consortium of Indian banks, led by SBI; ICRA cuts rating points again.
  • Jan 10 – Jet proposes to creditors that it will catch up with debt payments in arrears by September and from April will meet debt payments as they come due.
  • Jan 11 – Crisis talks between Jet and aircraft lessors have failed to ease a row over late payments, prompting some lessors to explore taking back aircraft
  • Feb 7 – Four airplanes taken out of business.

This is not a routine maintenance shutdown. It is repossession by the lessors. An airline which showed that it can’t earn enough to pay its lease. Its  a condition which is the most scary situation in any business.

Jet Airways has a mountain of liabilities to climb. Debts, salaries, lease and day to day operating expenses. Hereinafter, more flight cancellations will be seen, its revenue earnings will reduce significantly and analysts predict a bankrupt like situation. The aviation regulator, the DGCA, will like to see whether safety considerations are being compromised. A Rs 400-something share crashing to Rs 200-something in less than a year bears testimony of the state of affairs at Jet. Its shares are on a free fall, people just trade its shares by taking short positions irrespective of the general market sentiment.

This tells the story how the wealth of millions of shareholders’ has been wiped out with no signs of any recovery in near future.

Jet Airways has revealed that four of its aircraft have been grounded after it failed to pay their lease rentals.

Also readJet Airways’ Woes Mount, Lessors Start Repossession Process

In a follow-up to an earlier query from the BSE, the company notes that three aircraft previously grounded for “engine normalisation” have returned to service, but four others are “grounded due to non-payment of amounts outstanding to lessors”.

The airline did not identify which of the 121 aircraft in its fleet have been grounded. Flight Fleets Analyzer shows that the majority of its fleet it leased, with GECAS, Aircastle and BOC Aviation among the most exposed lessors.

It is also unclear if the grounded jets will be voluntarily returned to lessors, or if they are subject to repossession orders.

“The company is actively engaged with all its aircraft lessors and regularly provides them with updates on efforts undertaken by the company to improve its liquidity,” it adds.

The way Forward.

Volumes have already been written on Jet’s losses while suggesting little relief remedies for Jet Airways’ investors in the near future. However, Jet Airways did manage to gain something during the last 25 years which still stands tall amid its ruins.

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