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Attempts by Jet Airways CEO Vinay Dube to get emergency funding from banks and existing shareholders to pay employees’ salary dues have not yielded any positive results.
The banks have told the airline’s management that additional funding can be made available only after the bidding process is over and there is certainty about on-boarding a new investor to revive the airline. Requests to promoter Naresh Goyal and existing shareholders, including Etihad, for payment of salary arrears have also not resulted in a favourable outcome.
Jet Airways’ leadership team has spent the last few days trying to convince the consortium of Indian banks (led by SBI) to release some funds for employees. “We have told them repeatedly that our employees are facing grave hardships owing to non-payment of salaries and that if this were to continue any longer, they will have no option but to find employment elsewhere. Unfortunately, the banks have said that they are unable to make any salary commitments, if at all, until after the bidding process is complete,” Dube said in a communication to employees.
Sources from the banking industry said that additional funding cannot be released since the company is unable to produce any collaterals to secure the fresh loan. The lenders had earlier agreed to release funds required to keep five aircraft operational, but this was not accepted by the management.
Last week, Kiran Pawaskar, President of the All India Jet Airways Officers and Staff Association, had met the management, including Dube. During this meeting, the management had told the association that it will decide in a week whether the employees need to work till May 10 (when a potential investor’s name will be announced) or not. Jet Airways has 16,000 permanent employees and 6,000 contractual employees.
Pawaskar told BusinessLine that the management has asked for more time. “When the request of one month’s salary was declined, the management asked for 50 per cent of it. That too has not been accepted by the lenders. The management told us that it has not communicated to the employees whether they need to come to work or not and have left it to them to decide.”
Dube highlighted how difficult the situation is. “On the one hand, we are being told to preserve the value of Jet Airways during the bid process. On the other, with no salary payment, some of our colleagues, who are the very fabric and value of this airline, have no choice but to find employment elsewhere. When we highlight the disappointing irony of this situation to the lenders, we are simply told that this problem is to be addressed by the company’s shareholders, who should and could have agreed on a Resolution Plan a long time ago.”
‘400 employees have quit’
According to company sources, 400 employees have resigned from the company. The company owes over ₹450 crore in salaries to pilots, engineers and general managers among other staff members.
A Jet Airways team also approached the government to seek intervention and assistance but that too has not yielded positive results thus far.
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