The management of India’s Jet Airways has proposed temporarily suspending all operations of the struggling airline, Indian media reported on Tuesday, as the company awaits promised funds from banks in a rescue deal.
Its shares fell as much as 18.3 per cent to their lowest level since August 2015 following the news, as the future of the once-dominant Indian airline appeared increasingly uncertain.
Jet Airways is likely to temporarily shut down operations, said Indian business channel CNBC TV18, citing unnamed sources. The channel said Jet’s CEO has been authorised by directors at a board meeting to engage with its lenders one last time, and halt operations late Tuesday, if no funds arrive.
Separately, ET Now reported Jet’s management has proposed to suspend all operations as one option at Tuesday’s board meeting, or alternately continue with skeletal operations with any interim funds infused by State Bank of India (SBI), which leads Jet’s consortium of lenders.
Jet Airways did not immediately respond to a Reuters request for comment.
Its banks tried to calm investors and hint at a rescue of the airline that is saddled with roughly $1.2bn in debt.
“Lenders are committed to a revival plan for Jet Airways,” Punjab National Bank’s managing director Sunil Mehta told media on Tuesday. “SBI is working on the emergency funding, everything is under discussion, nothing is finalised.”
Mehta’s comments come after Jet informed all employees in a letter on Monday it was extending a suspension of international flights until Thursday due to a lack of funds.
Separately, an Indian government official told media the funding for the airline was likely to come through and that the banks were not looking to take the airline to bankruptcy court.
The airline, which over and above its bank borrowings owes money to its lessors, staff and others, has been struggling for weeks after failing to receive a stop-gap loan of about $217m from its lenders as part of a rescue deal agreed in late March.
In a bid to rescue the 25-year old carrier, Jet’s lenders are attempting to bring in a new investor to buy a stake of up to 75 percent in the airline and initial expressions of interest were submitted last week.
Local media have reported that as many as six parties have submitted expressions of interest, though it is still far from clear if an acceptable bid will materialise.
Jet currently has roughly 44 flights, and only about seven operational planes, a senior pilot with the airline and a member of the pilots’ guild told Reuters on Monday.
The airline had more than 120 aircraft operating a year ago, but competition from low-cost carriers such as IndiGo and SpiceJet, together with high oil prices, hefty fuel taxes and a weak rupee have lately piled on pressure.
Shares in Jet partially erased earlier losses and were down 9 per cent in late afternoon trade in Mumbai on Tuesday.