Govt. Ask Banks To Rescue Jet Airways, Urgent Meeting Called; Is It Because Of General Elections?
Jet Airways has become too big to fail.
In a surprise turn of events, Indian Govt. had asked banks to rescue Jet Airways, which is on the brink of fatal collapse.
An urgent meeting was called, and it seems that Govt. just doesn’t want Jet Airways to close down.
What is the real reason behind Govt.’s push to save Jet Airways?
Is there something to do with General Elections starting next month?
Indian Govt.’s SOS To Banks: Don’t Let Jet Airways Collapse
As per Reuters, Indian Govt. is doing everything to save Jet Airways from an imminent collapse. Jet Airways has debts of $1 billion+, and they are not able to pay their vendors, employees, suppliers, and partners, and things are gloomy.
They have already grounded more than 40 aircraft, which is 30% of their total fleet, and more than 150 flights are still getting canceled daily.
Reuters have reported that Govt. has asked the lenders, which are mainly public sector banks, to help Jet Airways deal with this mess, and avoid bankruptcy.
An unnamed official said, “Top officials at the finance ministry seek regular updates on the issue,”
Is Govt. Going Extra To Help Jet Airways?
As per reports, Govt. has decided to go one step ahead, and save Jet Airways.
National Investment and Infrastructure Fund (NIIF), which is 49% owned by Govt., and created to help stalled and new infra projects can be roped in to help Jet Airways clear their debt, and save themselves.
Such is the condition that Jet has stopped all flights to Abu Dhabi, which is the hub of Etihad Airways, which is the largest external shareholder in Jet Airways.
Pilots of Jet have already requested Govt to rescue them and help them get their salaries with interest.
Why Govt. Doesn’t Want Jet Airways To Fail?
The reason it seems is General Election 2019, which will start from next month.
If Jet Airways collapses, more than 20,000 employees will be fired, and the domestic aviation market will crumble.
During and before the elections, Govt. cannot afford news of such mass-firing, and it will trigger a negative image for the present Govt.
Besides, their promise of providing cheap rural connectivity via air-travel under UDAAN scheme will also seem like a failure.
Govt cannot afford this, especially at this juncture.
An unnamed Govt official has told Reuters that if India’s 2nd largest airlines collapse, then it will have “disastrous consequences for the investment climate”, which translates to bad publicity, and negative perception during elections.
If Govt.’s plans work out, then SBI, PNB, and NIIF can together own 30% of Jet Airways, and maybe in the future, Air Inda and Jet Airways can be merged.
We will keep you updated, as more details come in.