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Airlines responsible for their financial performance; govt can't interfere in day-to-day ops: Suresh Prabhu

Monday, April 01, 2019
By Manoj Rammohan

New Delhi: Efficient operations and financial performance are individual responsibilities of carriers, and the government cannot interfere in their day-to-day operations, Civil Aviation Minister Suresh Prabhu said amid Jet Airways crisis and turbulent times of the domestic airlines industry.

In view of intense competition, rising costs, shortage of pilots and grounding of planes hurting many domestic carriers, the minister also said the government has been constantly responding to industry conditions and cited measures taken, including reduction in central excise duty on jet fuel to 11 per cent from 14 per cent.

Cash-strapped Jet Airways has been forced to ground planes, cancel flights and delay payments, including salaries to pilots, while Air India continues to grapple with financial woes. On March 25, the board of ailing Jet Airways cleared a debt resolution plan whereby lenders would take control of the carrier.

Against this backdrop, Prabhu said that each airline prepares its own business plan on the basis of its own market assessment and financial resources.

"Based on its business plan, the efficient operations and financial performance are the responsibilities of each individual airline and its shareholders.

"However, the government has constantly been responding to industry conditions and undertaking specific measures to facilitate and enable growth of the sector," he told PTI.

In written replies to PTI queries, Prabhu said the airline industry is a dynamic industry which requires continuous adjustment according to global and domestic needs.

"It is our endeavour to support the industry, however, as stated we cannot interfere in day to-day operations of the airlines," he noted.

About Air India, the minister said a revival plan has been prepared for the national carrier that focuses on various aspects, including a comprehensive financial package and transferring non-core debt and assets to a special purpose vehicle.

The revival plan also focuses on higher level of operational efficiency by strengthening management and implementing best practice business processes and robust organisational and governance reforms.

Debt-laden Air India is staying afloat on taxpayers' money and an effort for its strategic disinvestment did not take off in May 2018.

Jet Airways pilots defer to April 15 its decision not to fly
Mumbai: A major crisis at the struggling carrier Jet Airways was averted Sunday after its pilots body National Aviator's Guild (NAG) deferred to April 15 its call of halting operations.

The decision was taken at an open house meeting of NAG members that took place both in Mumbai and Delhi yesterday afternoon, a guild source said.

The NAG, which claims representation of around 1,100 pilots of the total 1,600 with the full service carrier, last month announced that its members will not fly from today unless their pending salary dues were cleared and a clarity on future payments was provided by March 31.

Jet Airways has been defaulting on salary payments to pilots, engineers and senior management since August last year.

The loss-making airline, which is now under the ownership of SBI-led consortium of lenders following a debt-recast plan, Saturday said it could remit only the remaining amount of December salary to pilots and others.

However, the airline expressed its inability to clear the remaining three months dues of the staff immediately.

"The board of directors and the management team are working as fast as possible to implement the resolution plan agreed with the consortium of Indian lenders to quickly restore the much-needed stability to our operations and build a sustainable future for the airline," Jet Airways chief executive officer Vinay Dube said in a communication to pilots and engineers Saturday.

"These are complex processes and it has taken longer than we had expected and as such we are only able to remit your remaining salary for December 2018," he said.

A K Purwar likely to chair Jet Airways’ interim management committee
New Delhi:
The consortium of lenders to Jet Airways is considering roping in former SBI chief A K Purwar as chairman of the interim management committee as the cash-strapped airline looks for a new investor, a senior official said.

The official of the State Bank of India (SBI) also said the lenders are in the process of appointing SBI Capital as advisor in efforts for finding a the new investor.

As the full service carrier struggling to stay afloat, its board on March 25 approved a debt resolution plan that would see immediate fund infusion of Rs 1,500 crore and lenders taking control of the airline.

According to the official, Purwar is expected to be soon appointed as chairman of the interim management committee.

Purwar was the chairman of the State Bank of India between 2002 and 2006. The bank is also the lead lender to Jet Airways.

Apart from monitoring the daily operations and cash flow of the company, the committee would also oversee the process for roping in a new investor, the official said.

With the implementation of the resolution plan, SBI would next month invite expression of interest (EoI) from potential entities willing to invest in the airline. A finality about the new investor or investors is expected by the end of May.

"My expectation is May 31... market is open for everyone whosoever wants to come in. There will be expression of interest (EoI) which will be given by April 9 and binding bids by April 30," SBI Chairman Rajnish Kumar said last week.

Jet Airways, one of the oldest private sector airlines, is sitting on a debt of Rs 8,200 crore and requires about Rs 4,500 crore for carrying on its operation smoothly.

Acute financial crunch has forced the airline to ground aircraft, cancel flights and delay payment of salaries, including to pilots.

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