Government asked banks to ‘rescue’ Jet Airways without pushing it into bankruptcy: Report

Jet Airways which has debt of more than one billion dollars on its balance sheet, is struggling to stay afloat. It has delayed payments to banks, suppliers, pilots and lessors - some of whom have forced the airline to ground as many as 41 planes.

New Delhi: News agency Reuters sources say that the state-run banks have been asked to rescue privately held Jet Airways without pushing it into bankruptcy. The report comes hours after Union Civil aviation minister Suresh Prabhu called for an emergency meeting on Jet Airways Ltd as the debt-ridden airline major struggles to make lease payments to its creditors

"New Delhi has urged state-run banks to convert debt into equity and take a stake in Jet in a rare move in India to use taxpayer money to save a struggling private-sector company from bankruptcy" Reuters said.

In the report, the Reuters cited "two people within the administration" as its source.

Earlier today, Suresh Prabhu, asked the civil aviation secretary to call for a meeting to discuss grounding of flights, advance bookings, cancellations, refunds, and safety issues, if any, at Jet.

Jet Airways which has debt of more than one billion dollars on its balance sheet, is struggling to stay afloat. It has delayed payments to banks, suppliers, pilots and lessors - some of whom have forced the airline to ground as many as 41 planes. Prabhu, in a tweet, said he has also asked the civil aviation secretary to get hold of a report on Jet’s compliance issues from the aviation regulator, the Directorate General of Civil Aviation.

On Monday, Jet Airways engineers’ body wrote to aviation regulator DGCA, seeking its intervention in the recovery of their salary dues, saying non-payment was affecting their psychological condition which, in turn, was a “risk” to the airline’s flight operations.

As Jet Airways continues to ground aircraft and cancel significant number of flights owing to non payments of lease rentals, the airline's aircraft maintenance engineers' union wrote to the aviation regulator on Tuesday that three months of salary was overdue to them and flight safety "is at risk".

"It has been arduous for us to meet our financial requirements, result of which have adversely affected the psychological condition of Aircraft Engineers at work and therefore the safety of public transport airplanes being flown by Jet Airways across India and the world is at risk," the Jet Aircraft Engineers Welfare Association (JAMEWA) said in a letter to the Directorate General of Civil Aviation (DGCA).

The letter, which has been accessed by PTI, stated: "While the senior management is finding a resolution to be in business, we the Engineers who inspect, troubleshoot and certify the public transport airplanes for its airworthiness are in tremendous stress due to non-payment of salaries on time, since last 7 months. As of now, 3 month's salary is overdue to us."