NEW DELHI | MUMBAI, Feb 21, 2019
The story continues…..
India’s second largest airline by market share, Jet Airways has defaulted on aircraft lease rental payments to MC Aviation Partners since October. Jet Airways’ financial condition is so precarious that Jet has exceeded even the grace period of five days for each month.
Jet has taken five Boeing 737 planes on lease in 2013 from MC Aviation, a subsidiary of Mitsubishi Corp.
The amount of rental dues is not known yet.
MC Aviation hasn’t sent any repossession notice to the struggling carrier yet, but it will watch Jet’s board meeting on Thursday and shareholders’ meeting next week before deciding on taking any action.
“We have worked with the airline for many years and it has been in financial trouble before. But it has always come out of it. We hope a decision (on additional funding) will be taken tomorrow,” an MC Aviation executive said on Wednesday.
In the meantime, formalities are in progress for lender banks to be appointed on the Board of crisis-ridden Jet Airways.
Also Read: Explainer: Jet Airways crisis
The crisis-ridden Jet Airways has called an extraordinary general meeting today to :
– get stakeholders’ approval for a rights issue,
– do a restructuring exercise that will convert part of the its debt into equity by lenders, and
– make amendments in the Memorandum and Articles of Association of the company.
The changes will allow Jet Airways to meet its funding gap of nearly Rs 8,500 crore, which is required for its smooth operations. In a regulatory filing on February 14 Jet Airways has said it has approved the bank led provisional resolution plan (BLPRP) in order to meet a funding gap of nearly Rs 8,500 crore.
The airline recently has seen a number of lows. It had to put on hold the deliveries of six Boeing 737 Max planes that were due by March. Four of Jet’s planes were grounded due to defaults in lease payment to the lessors. The financial troubles also forced the airline to cut down its operations.
After founding the Airline 25 years ago, Jet’s promoter Naresh Goyal is set to lose its controlling stake.