HEADLINES:
April 21 2019
Jet lessors jittery as resolution date nears
09 March 2019

Take possession of grounded aircraft so as to avoid third party claims in case of a failed plan

In a wait-and-watch move, lessors are camping in Mumbai to progressively take possession of their aircraft leased out to Jet Airways before flying them out of India, in case the resolution plan fails to take off by March 31.

As per Jet Airways’ filing with stock exchanges, 28 aircraft have been grounded due to non-payment of lease rental, but according to the airline’s employees, about 50 aircraft are currently not flying for various reasons. These have been grounded at various airports, including Delhi, Mumbai, Chennai, Hyderabad and Bengaluru.

Seven years ago, when Kingfisher Airlines got grounded due to mounting losses, lessors found their aircraft getting entangled in litigation, while some were even seized by tax authorities as well as airport operators towards claims on the beleaguered airline.

To avoid such situations, lessors of Jet Airways are taking possession of their aircraft before the situation could worsen and so that no third party could make any claims on their aircraft in case the resolution plan fails. Jet Airways, which completed 25 years last year, has good relations with lessors, which is why they are waiting for a few more days before cancelling their lease agreements after which the aircraft could be redeployed.

‘Lessors supportive’

A Jet Airways spokesperson said, “The airline regrets the inconvenience caused to its guests and continues to be actively engaged with all its aircraft lessors, providing them regular updates on its efforts to improve liquidity. Aircraft lessors have been supportive of the company’s efforts in this regard.”

“As a minority shareholder, Etihad continues to work constructively with the Jet Airways board, management team and other stakeholders,” an Etihad Airways spokesperson said.

During the second quarter this year, when the airline reported a net loss of ₹1,323 crore, lessors had provided bulk of the $300 million that the airline had received as lease incentives and advances from banks. The lease incentives were towards future receivable of lease rentals.

As trouble-shooting at Jet is getting delayed, a small number of employees are believed to have quit and joined other private airlines.

Jet Airways shares closed with a gain of 0.04% at ₹243.10 on the BSE.

 

 

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