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Jet hits more turbulence as fleet shrinks and fuel terms tightened

NEW DELHI/SINGAPORE (Reuters) - Jet Airways is fighting for survival as its fleet shrinks and some refiners tighten fuel supply terms despite efforts by the airline’s lenders to find a new investor to bail out the cash-strapped Indian carrier.

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Saddled with more than $1.2 billion of bank debt, the airline has been teetering for weeks and has yet to receive a loan of about $217 million from its lenders as part of a rescue deal agreed in late March.

Jet’s fleet had shrunk to 119 earlier this year from 124 planes last year and India’s aviation regulator has approved the de-registration of seven grounded Boeing 737 planes leased to Jet, according to notices posted on the Directorate General of Civil Aviation’s (DGCA) website on Wednesday. Applications to de-register a further 24 aircraft are pending.

The airline now has 115 planes, according to its website, though it was not immediately clear if that includes the latest de-registrations. Of the latest seven planes to be de-registered, five belong to MC Aviation Partners, a unit of Mitsubishi Corp, and two are owned by Avolon, the filings show.

Once a plane is de-registered, the lessor can take it out of the country and lease it to other airlines.

“The first de-registration filing by one lessor opened the floodgates for many others,” said one leasing source who has dealings with Jet.

Once India’s leading private carrier, Jet has been forced to ground more than three quarters of its fleet, mainly by lessors owed several months’ payments, sources have said.

Aircraft lessors including Aviation Capital Group, Avolon and BBAM filed applications on Tuesday to de-register 13 Boeing 737s, a source aware of the matter told Reuters, taking the total number of such requests to 24.

Aircraft fuel suppliers are also tightening the noose.

Indian Oil Corp, for the second time, halted supply of fuel to Jet for a few hours on Wednesday over non-payment of dues, a spokesman for the refiner said.

Hindustan Petroleum Corp and Bharat Petroleum Corp are supplying fuel on a cash-and-carry basis, which means Jet needs to pay for the fuel at the time of purchase.

Jet’s lenders, led by State Bank of India (SBI), have been seeking a new investor to take a stake of up to 75 percent in the airline.

Initial bids were to be submitted by the end of Wednesday, but SBI has extended the deadline to April 12.

Additional reporting by Jamie Freed in SINGAPORE, Sudarshan Varadhan and Nidhi Verma in NEW DELHI; Editing by Sherry Jacob-Phillips and David Goodman