Just when it looked like things might finally be looking up for Jet Airways, it seems as though bad news has prevailed. The Indian carrier, currently in massive amounts of debt, will face a pilot strike from Monday 1st of April.
The long-running chairman of Jet Airways finally stood down this week after 25 years in the role. With Naresh Goyal releasing his grip on the carrier, creditors can now focus on the future of Jet Airways. This will mean working out a plan to pay off debt, and ungrounding their fleet of aircraft.
Jet Airways has been in financial difficulties for at least seven months. This latest strike of over 1000 pilots, however, could be the airlines’ biggest problem to date. With pilots not flying aircraft, the percentage of planes still able to operate could stop making money for the airline.
Debt for equity
Jet Airways is expected to take part in a debt for equity exchange with some of its creditors. This deal effectively sees part of the airline’s debts written off in exchange for a stake in the company. It is expected that the creditors taking stakes in the company would first look to pay off some of the most serious debts.
This would likely include paying off the aircraft lessors who have grounded a large proportion of the airlines’ fleet. These aircraft have been grounded because Jet Airways hasn’t paid the owners. However, by being grounded, the aircraft are unable to make money for Jet. This means the company has even less income available to do anything about their mounting debts.
Mumbai, we have a problem
While the resignation of Naresh Goyal was set to be a positive step for Jet Airways, it seems as though there may be another, more serious problem to overcome first. Over 1,000 of Jet Airways’ pilots are set to go on strike due to a row over unpaid wages. The New Delhi Times reports that only 12.5% of wages were paid by the airline in December 2018. Additionally, all wages from January and February remain unpaid at this time.
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The strike could be avoided if pilots receive pay by tomorrow, March 31st. The New Delhi Times reported that pilots were due to finally be paid on March 29th, using money provided by the State Bank of India as interim funding.
Whether the strike will actually go ahead is yet to be seen. It’s not known the exact extent that a strike would have on the airline. Simple Flying will, of course, keep readers up to date with any developments in this story.
Do you think Jet Airways’ pilots will actually walk out? Let us know in the comments down below!