India's debt-stricken Jet Airways grounded all of its operations Wednesday after failing to secure emergency funding from lenders, the carrier said in a statement.
‘Jet Airways is compelled to cancel all its international and domestic flights. The last flight will operate today,’ it said, adding that the decision would take ‘immediate effect.’
Jet had asked a consortium of lenders led by the State Bank of India to urgently provide four billion rupees ($57.5 million) but said that this had not been forthcoming.
‘This has been a very difficult decision but without interim funding, the airline is simply unable to conduct flight operations in a manner that delivers to the very reasonable expectations of its guests, employees, partners and service providers,’ it added.
The airline was once India's second-biggest by market share but is on the brink of collapse with debts of more than $1 billion.
Jet was operating just five planes on Wednesday because it could not pay its bills, down from a fleet of more than 120 at its peak.
The carrier has cancelled hundreds of flights in recent weeks, stranding thousands of passengers.
It has repeatedly defaulted on loans and failed to pay staff in recent months.
The consortium took control of Jet in March, pledging to give $218 million in ‘immediate funding support’ as part of a debt resolution plan.
But they have failed to release most of the money and the banks also failed to agree after a meeting of several hours on Monday on how to proceed.
The SBI-led consortium is looking for a buyer for Jet and a deadline passed on Friday for prospective bidders to express an interest in acquiring a 75 percent stake in the carrier.
The SBI is yet to announce a shortlist of prospective bidders but Indian media said four were in the running including Etihad Airways, which already owns a 24 percent stake.
‘Jet Airways will now await the bid finalisation process by SBI and the consortium of Indian Lenders,’ the airline said, adding that it hoped to resume services ‘as soon as possible’.
Bad investments, competition from several low-cost carriers, high oil prices and a weak rupee have led to Jet's current financial predicament, analysts say.
A collapse of Jet, and the loss of more than 20,000 jobs, would deal a blow to Prime Minister Narendra Modi's pro-business reputation as he seeks a second term in ongoing national elections.
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