The cash-strapped airline has defaulted on lease rent and other dues to lessors and other vendors, several of whom have served a notice on the airline. A meeting was convened at the State Bank of India headquarters in Mumbai and attended by the Jet management, led by founder-chairman Naresh Goyal, to give assurance to the leasing companies, maintenance repair firms, and other vendors. The meeting takes place in the backdrop of the airline defaulting on its loan principal and interest payments for the December-end quarter. Banks have already initiated steps for the resolution of stressed asset according to Reserve Bank of India norms.
Jet, which has posted over Rs 2,500 crore of losses in the two preceding quarters, is trying to mop up fresh funds from a consortium of banks led by State Bank of India and strategic partner Etihad Airways. Goyal has also been meeting senior functionaries and bureaucrats in the central government, seeking support for the airline. “The lessors want a firm payment plan and a timeline for clearance of dues. The meeting was convened to give comfort to lessors and other service providers as well as apprise them of fundraising plans,” said a source familiar with the development. On their part, the leasing companies are doing their own risk assessment on whether to continue with leases or consider other steps.
While the airline has been unable to meet payment obligations, it has sought discounts from lessors and other vendors. Banks, too, wanted to know if the service providers could support the airline by agreeing to provide fresh capital and by restructuring debt, said another source. A spokesperson for leasing company BOC Aviation declined to comment.
A public sector banker aware of the talks said working capital support continues. At present, there is no intent to turn off the taps. However, that should not be considered as a basis to carry on with business as usual.