Embattled Jet Airways said on Wednesday it was halting all flight operations after its lenders rejected its plea for emergency funds, potentially bringing the curtains down on what was once India's largest private airline.
The carrier, saddled with roughly $1.2 billion of bank debt, has been teetering for weeks after failing to receive a stop-gap loan of about $217 million from its lenders, as part of a rescue deal agreed in late March.
"The airline has been left with no other choice today but to go ahead with a temporary suspension of flight operations," the company said in a two-page statement late on Wednesday.
At its peak, Jet operated over 120 planes and well over 600 daily flights. The airline, which has roughly 16,000 employees, has in recent weeks been forced to cancel hundreds of flights and to halt all flights to overseas destinations, as funds have dried up.
Intense competition from low-cost carriers, like Interglobe-owned IndiGo and SpiceJet, together with higher oil prices, hefty fuel taxes and a weak rupee have piled pressure on the airline in recent months.
In its statement on Wednesday, the airline thanked its loyal customers for their patronage and support over 25 years and said it "sincerely and profusely apologizes for the disruption to the travel plans of all its guests."
The airline said it would continue to work with its lenders, who are trying to identify an investor willing to buy a majority stake in the airline and attempt to turn it around.
Jet Airways said it would continue to support the bid process initiated by the banks and that it hopes to resume flying soon. Its lenders, led by State Bank of India (SBI), have been seeking expressions of interest for an up to 75 percent stake in the airline. Initial expressions bids were submitted last week.
Jet Airways, in its statement, said it had been informed late on Tuesday night by its lenders that they were unable to consider its request for critical interim funding.
"Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going," the airline said.
Two sources at state-run banks told Reuters that the banks had rejected a request for 4 billion rupees ($58 million) from Jet to keep itself temporarily afloat.
"Bankers did not want to go for a piecemeal approach which would keep the carrier flying for a few days and then again risk having Jet come back for more interim funding," said one of the bank sources directly involved in Jet's debt resolution process.
The sources declined to be named as they were not authorized to discuss the matter with the media. SBI did not immediately respond to a request for comment.
The crisis at Jet, which owes vast sums to suppliers, pilots lessors and oil companies, has deepened in recent weeks as its lessors have scrambled to de-register and take back planes, in a sign the bank rescue plan had failed to assuage their concerns.
India's aviation regulator said on its website on Wednesday that lessors had applied to de-register another four Boeing Co 737 planes.
An analysis of the latest data disclosed by India's Directorate General of Civil Aviation shows that Jet's lessors have, so far, sought to deregister and repossess at least 48 planes operated by Jet. Once deregistered, lessors are free to reclaim a plane and lease it to another airline.
The rapid exodus of planes risks further eroding value from the carrier, even as lenders scurry to find an investor willing to buy a majority stake in the airline.