The woes of India’s second-biggest airline Jet Airways continue to mount as losses and a severe cash crunch have forced it to defer salaries and cut back on flights.
The troubled airline has announced that from Wednesday onward it will cancel about 40 flights to Persian Gulf destination including Dubai, Muscat, Doha and Abu Dhabi from various Indian cities. The airline said it was attempting to move out of uneconomical routes to more profitable ones, The Times of India reports.
On Sunday the troubled airline had to cancel 14 flights after some pilots called in sick over non-payment of their wages, Press Trust of India reports.
The airline said affected passengers were duly informed about their flight status via SMS alerts and they had been re-accommodated or compensated, PTI added.
Jet Airways has been defaulting on salary disbursements to its senior management along with pilots and engineers since August because of a severe cash crunch.
The airline is saddled with US$1.1 billion in debt and says it needs an immediate cash infusion of $300 million. So far this financial year it has posted three consecutive quarterly losses.
Jet Airways founder and chairman Naresh Goyal has been scouting for investors and is reportedly in talks with Etihad Airways (which currently holds a 24% stake in Jet Airways), Tata Group and a consortium of Air France, KLM and Delta.
The Tata Group wants to buy a controlling stake and is open to Goyal retaining a minority stake with Etihad staying on as a minority investor.
As for Etihad, talks are on to see under what circumstances it will be willing to raise its stake to 49%. Under Indian laws 100% foreign direct investment is permissible in the aviation sector, but a foreign airline’s stake should not be above 49%. The rest can be owned by a non-airline foreign entity.
Though initially Tata appeared to be the frontrunner, now Goyal appears to be more keen to strike a deal with Etihad.