Jet Airways has decided to ground 23 aircraft, as it attempts to stave off bankruptcy.
The airline has been in financial difficulty for some time, and this move to shuffle their fleet may buy time in order to survive.
What are the details?
Recently Jet Airways was hurting for cash. They needed to raise an astonishing 200-300 million USD in order to pay back defaulted loans.
According to Bloomberg, the carrier said that the payment was “delayed due to temporary cashflow mismatch”. As such, the airline has now defaulted on its payments. This means that Jet Airways has been forced to ask others for even more cash. The airline appears to be on a slippery slope of borrowing cash to pay back borrowed cash.
They are also looking into alternatives, such as equity for cash swap, or grounding parts of their fleet that are the most expensive to operate.
Which planes are they grounding?
First a bit of a recent history lesson. Between the 8th and 27th of February, Jet grounded 13 aircraft.
From there, they grounded another six on the last day of the last month, before another two were grounded by March 2nd, to a total of 23 aircraft.
These aircraft are actually leased, not owned by the airline. As such, the reason given for their grounding is that Jet Airways simply cannot make the lease payments. Instead of suffering the embarrassment of having them repossessed, they grounded the aircraft and informed the lease companies that they were available.
However, other media have suggested that they are being repossesed, and that is why they are grounded. At this point, it is still unclear and the actual lease company has not been identified.
Of the 115 aircraft that Jet Airways has on their books, 100 are leased by air leasing companies. With this repossession of 23 aircraft, this will drop their actual fleet size to under 100.
How this will further impact the company (such as refunded tickets or reduced capacity) remains to be seen
What do you think? Will this plan help the company?