Having denied a Rs 400 crore lifeline by lenders, Jet Airways said it will temporarily suspend all operations from Wednesday.
In a regulatory filing, the carrier said: “Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going.”
The company earlier on Wednesday was operating five planes, down from a fleet of more than 120.
Experts on Dalal Street blamed carrier’s management, banks and the government for the mess.
Ajay Bodke, CEO of PMS at Prabhudas Lilladher said: “Jet follows a raft of other failures in the sector such as Kingfisher, Deccan and Sahara, among others. It is indeed a tragic day for the Indian aviation sector.”
According to the expert, Jet’s halting operations is a wake-up call for the aviation authorities.
“They should seriously ponder as to why India is emerging as a graveyard for carriers. It is a reflection not only on the sub-optimal management of the operations by owners, but also of the sheer neglect by the aviation mandarins of incessant pleas from the industry to introduce sensible and reasonable taxation & tariff policies as well as other expenses charged by the airports,” Bodke added.
Experts now see a knee jerk reaction in Jet Airway’s stock. Shares of the company had plunged nearly 8 per cent on the NSE to Rs 241.50 on Tuesday.
Deven Choksey, MD at KR Choksey Investment Managers said the stock may be in a freefall on Thursday.
“The Jet situation has been very badly handled by the lenders. Governance and the govt should have played their role. I am very unhappy with the way entire Jet saga is handled. The government and lenders could have bailed it out. We are sending out a bad message,” the expert said.
In another regulatory filing on Wednesday, the company said that promoter and promoter group held 51 per cent in the carrier as of March 31, while the rest was with public.
Among public shareholders, Etihad owned 24 per cent stake in the company, mutual funds 3.58 per cent, the Life Insurance Corporation of India 2.07 per cent, FPIs 1.47 per cent with others holding the rest.
The halting of operations comes months after the carrier trying to secure both interim and long-term funding. It has repeatedly defaulted on loans and failed to pay staff in recent months.
Jet Airways will now await the bid finalisation process by SBI and the consortium of the lenders.
Source: Economic Times