India’s Jet Airways has defaulted on loans and most staff have not been paid for many months (PUNIT PARANJPE )

Mumbai (AFP) – Jet Airways shares plunged Tuesday amid reports the board of the stricken Indian airline would suspend all operations after lenders refused to release emergency funds to keep the carrier flying.

An emergency board meeting was called for Tuesday after the latest blow to the debt-laden company which is teetering on the brink of collapse.

Thousands of passengers have been stranded in recent weeks after the airline, which has debts of more than $1 billion, cancelled international flights because it cannot pay its bills.

Chief Executive Vinay Dube called the board meeting after lenders led by the State Bank of India failed on Monday to agree to give needed emergency cash. 

“The management will seek guidance from the board on the next steps forward,” Dube said in an email to staff late Monday as he announced that the cancellation of international flights was being extended to Thursday.

Shares plummeted about 19 percent on the Bombay Stock Exchange’s Sensex index as the exchange sought clarification from Jet over a CNBC TV18 report that the airline was “likely to temporarily shut down its operations”.

Jet’s share price is now worth barely a third of its value of 640 rupees (95 cents) of one year ago.

Indian dailies and news channels said suspending all flights was one option open to the board although this could mean Jet would lose its operating license.

Business Standard quoted sources saying the airline had only enough fuel to keep its seven remaining jets running until Tuesday afternoon. 

An official from the National Aviation Guild, the union for Jet pilots, told AFP: “The airline is flying seven planes right now. The minimum number to keep its scheduled operations licence.”

Jet has been in a tailspin for months. Its fleet has been cut from about 120 in December. It has defaulted on loans and most staff have not been paid for many months.

A consortium of lenders took control of Jet in March, pledging to give $218 million of “immediate funding support” as part of a debt resolution plan.

– ‘Goyal pulls out’ –

The lenders met for several hours on Monday but failed to agree on how to proceed.

Later the State Bank of India released a statement saying the banks were trying to help Jet.

“Cooperation by and support from all the other stakeholders will be the key to the success of the process,” it added.

The SBI-led consortium is trying to find a buyer for Jet, which was until recently India’s second-biggest airline by market share.

A deadline passed Friday for prospective bidders to express an interest in acquiring a 75 percent stake in the carrier.

Etihad Airways, which owns a 24 percent stake, has reportedly submitted an expression of interest to buy a controlling stake.

The Press Trust of India news agency reported Tuesday that Jet founder Naresh Goyal had pulled out of bidding, deciding not to try to retake control of the airline that he ran until last month. 

The SBI was expected to announce a shortlist of prospective bidders later on Tuesday. They would then have until April 30 to submit formal bids.

A collapse of Jet would deal a blow to Prime Minister Narendra Modi’s pro-business reputation as he seeks a second term in ongoing national elections.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.