Indian Oil halts fuel supply to Jet Airways over non-payment of dues

Andrew Cummings
April 12, 2019

Cash-drought has forced the airline to default on several payment obligations such as to the banks, aircraft lessors and other vendors besides non-payment of March salaries to its 16,00 employees.

Industry experts say that Jet's valuation would have dropped in recent weeks given that lessors have deregistered some of the grounded planes and the Director General of Civil Aviation has handed over some of the landing slots to rivals after the airline cancelled a large number of flights. Though fuel supplies resumed after some hours, it was the second time that Indian Oil had taken such a decision.

The latest development came on a day when lenders of the debt-ridden airline tweaked the terms for stake sale and also extended the submission deadline for Expression of Interest bids from prospective buyers.

At present, the airline owes over Rs 8,000 crore to a consortium of lenders led by the State Bank of India.

International Olympic Committee and Jet did not immediately respond to a request for comment.

Only qualifies bidders will be allowed to submit binding bids by April 30, added the sources.

In a consortium, each member has to submit solvency certificate, which is a proof of an entity's financial stability.

As part of the debt resolution plan for the full service carrier, the lenders are looking to restructure "existing facilities and infusion of funds by way of loans or acquisition/ subscription of up to 75 per cent of equity share capital of the company".

Jet Airways' troubles seem to have caught up with its passengers at Schiphol airport, 6,374 km away.

Meanwhile, a European cargo services provider seized one of Jet Airways' Boeing planes at the Amsterdam airport for non-payment of dues on Wednesday.

The airline has confirmed the cancellation of the said flight attributing to "operational reasons".

Currently, the airline operates 26 aircraft which includes Airbus A330s, Boeing 777s, 737-800 and ATRs to various destinations like London, Toronto, Singapore, Amsterdam, Paris, Bangkok and domestic sectors like Mumbai-Delhi among others. The airline is now operating only 26 aircraft as several planes from its earlier fleet size of around 120 remain grounded for non-payment of lease rentals.

On Wednesday, Jet Airways's shares fell 1.59% to Rs 263.40 apiece on BSE.

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