New Delhi/Mumbai, April 5 (IANS) The country’s largest oil marketing company (OMC) Indian Oil Corporation (IOC) resumed fuel supply to Jet Airways within hours of effecting a cut on it, thus preventing further disruption of services of the airline that is already running with a depleted fleet.
According to a senior IOC official, the OMC had stopped fuel supply to Jet Airways for some time on Friday but restarted the same after receiving assurances over payment of dues from the airline.
However, the details of the assurances have not been shared.
Jet Airways is already in the midst of a severe liquidity crisis that has affected its operations and resulted in the grounding of several of its aircraft. The airline is currently operating just 26 aircraft as several planes from its earlier fleet size of around 120 remain grounded for non-payment of lease rentals.
Industry insiders told IANS: “The two companies (IOC and Jet) have a very long standing business relationship and based on that, an understanding has been reached. Another factor here is that since a consortium of banks led by the State Bank of India (SBI) is involved in the resolution process, further disruptions are being avoided.”
The development comes a day after the lenders to the cash-strapped airline said that they intended to pursue the bank-led resolution plan for the airline under the present legal and regulatory framework.
However, the lenders did not divulge any information about the present funding needs of the airline.
Under the debt resolution plan, the lenders would inject up to Rs 1,500 crore working capital into the airline and convert their debt into equity to revive the airline and then sell their stake in it.
The airline owes over Rs 8,000 crore to the lenders, led by the SBI. At present, the airline is hard-pressed for funds. It is expected to receive the first tranche of Rs 1,500 crore promised by the banks as part of the debt resolution plan.
According to industry sources, the first tranche of fund is expected in a day or two. But without further funding, the airline’s fleet size is expected to shrink further.
The airline has been struggling with cash flows for the past six months because of rising fuel costs and intense competition. To keep the company running, it has even delayed payments to the lessors, airport operators and OMCs besides a part of its workforce.
On Wednesday, the airline informed its employees that the salaries for March will be delayed. Salaries are pending since January.