India’s Jet Airways has suspended its operations from Wednesday as it cannot pay for fuel and other critical services, agencies report.
The federal policies, competition from budget airlines and the company’s wrong decisions are blamed for the mess Jet has landed itself in.
Jet urgently needs funds from state-run banks who took control of the airline in March and promised $218 million as part of the debt resolution plan. The lenders have not released funds.
Late on Wednesday, they rejected its request to sanction $58 million to pay for fuel and its senior staff who have not received salary since December last year.
The lenders are looking for someone who can take 75% stake in the airline. They do not seem to believe in the bail-out plan through interim funding.
Lenders led by the State Bank of India may be fearing that while emergency funds will help the airline to start flying again, it may run into another financial turbulence and come back asking for more funds.
Amid a backlog of $1.2 billion debt to settle with banks, competition from budget airlines such as IndiGo and GoAir and soaring oil prices, the federal government’s 5% import duty on jet fuel in September last year came as the last straw for Jet.
Earlier, the airline had made some wrong decisions such as the $500 million acquisition of Air Sahara, too much focus on expansion instead of reforms and failure to cut costs when the going was good.