Industry

Bank unions want lenders to offer special loans to Jet Airways staff

Jet Airways owes over ₹8,500 crore to banks and around ₹4,000 crore to its vendors and aircraft lessors. File

Jet Airways owes over ₹8,500 crore to banks and around ₹4,000 crore to its vendors and aircraft lessors. File   | Photo Credit: Reuters

The unions had also written to Prime Minister Narendra Modi demanding a take over of the carrier by the government so as to ensure job security to the employees

With an uncertain future of the over 22,000 employees of the grounded Jet Airways, bank unions on Monday suggested that lenders must come forward to offer special loans to them to tide over related-party transactions (RPT) over the financial crisis arising from non-payment of salaries.

Last week, the unions had written to Prime Minister Narendra Modi demanding a take over of the carrier by the government so as to ensure job security to the employees. In a letter to the Indian Banks Association, the union had requested the banking lobby to “ask member banks to device a special loan scheme to the Jet staff to help them tide over their present financial problems”.

The unions also suggested that banks can extend special and exclusive loans to the airline to pay the salary dues or some subsistence payments to them against proper collateral. Vinay Dube, chief executive, Jet Airways, said on Saturday that around ₹170 crore would be needed to clear at least a month’s salary. Flying for 25 years, last week, Jet announced grounding after its lenders declined an interim funding of ₹400 crore.

Mr. Dube, along with Maharastra Cabinet minister of Finance, Sudhir Mungantiwar, Civil Aviation secretary Pradeep Singh Kharola, chief financial officer Amit Agarwal, representatives of unions of the pilots, engineers, cabin crew and ground staff met Finance Minster Arun Jaitley in Delhi over the weekend. Mr. Jaitley had assured to look into the issues of the grounded airline.

The airline owes over ₹8,500 crore to banks and around ₹4,000 crore to its vendors and aircraft lessors and months of salaries to the employees apart from thousands of crores of rupees in ticket refunds to passengers. That apart, it has an accumulated loss of over ₹13,000 crore. A consortium of banks led by the State Bank of India had said they were hopeful of a successful bidding process for stake sale in the airline. Bank unions said they were happy that lenders are not showing any hurry to further lend to the airline and have invited bidders to take over.

“When promoter Naresh Goyal is unable to bring in further capital, and when the airline is already cash-starved, it is most prudent that banks do not extend any fresh loans unless some viable proposals come to take over and run the airline,” the letter said.

If viable proposals do not come at the earliest to take over the airline, banks should recommend to the government to either take over the airline or merge it with Air India, the union said.

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Printable version | Feb 21, 2020 8:21:52 AM | https://www.thehindu.com/business/Industry/bank-unions-want-lenders-to-offer-special-loans-to-jet-airways-staff/article26911671.ece

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