Indian gov’t to probe Jet as airline teeters

The announcement came after Jet cancelled most of its international flights Thursday and as lenders desperately seek a buyer to keep the beleaguered airline running.

A collapse would deal a blow to Prime Minister Narendra Modi’s pro-business reputation as Indians vote in a mega six-week-long election that started Thursday.

Aviation minister Suresh Prabhu tweeted that his ministry would “review issues related to Jet Airways” and “take necessary steps to minimise passenger inconvenience and ensure their safety”.

Jet was until recently India’s second-biggest airline by market share but is close to going under with debts of more than $1 billion.

The Mumbai-based carrier has been forced to ground the majority of its fleet after months of defaulting on loans and struggling to pay lessors and staff.

It told the Bombay Stock Exchange Thursday that it had grounded 10 more planes due to non-payment.

The airline is believed to now be operating just 16 planes out of a fleet of 119. That is below the 20 required by Indian aviation regulators to fly overseas.

Thousands of customers have been stranded in recent weeks after hundreds of flights were cancelled, in some cases with little or no notice.

All of Jet’s long-haul flights were cancelled on Thursday, including to London, Paris and Amsterdam. They were due to run later on Friday.

Thursday and Friday services to Colombo and Singapore were also cancelled.

Close of play Friday is the deadline for prospective bidders to express an interest in acquiring a 75-percent stake in the airline.

A consortium of lenders led by the State Bank of India started the stake sale process on Monday. Any interested parties will then have until April 30 to make a formal bid.

Several airlines, including Etihad, are interested in bidding according to reports.

The consortium took control of Jet Airways last month after creditors injected $218 million of “immediate funding support” as part of a debt resolution plan.

The deal saw founder Naresh Goyal step down as chairman.

Etihad Airways, which owns a 24-percent stake in Jet, has submitted an expression of interest to buy a controlling stake of up to 75 percent, according to Indian business dailies.

Goyal has also not given up hope of retaking control of the airline, papers say, although it is unclear that he would be able to put the necessary funds together.

– Alarm bells –

Alarm bells for Jet Airways first rang in August when it failed to report its quarterly earnings or pay staff, including pilots. It later reported a loss of $85 million.

In February, it secured a $1.19 billion bailout from lenders to bridge a funding gap, but its crisis has deepened.

The carrier has been badly hit by fluctuating global crude prices and a weak rupee, as well as fierce competition from budget rivals.

Mismanagement has also plagued the airline with analysts tracing the start of Jet’s financial problems to its 2006 purchase of Air Sahara for $500 million in cash.

Goyal reportedly ignored the advice of associates who said the cost was too much.