Jet Airways close to securing ₹1,500 crore loan from SBI2 min read . Updated: 04 Jan 2019, 08:51 PM IST
Jet Airways has scheduled a meeting on 8 January with vendors, lessors and SBI officials to discuss the debt restructuring plan
New Delhi: India’s debt-laden Jet Airways is close to reaching a deal with State Bank of India (SBI) for a fresh loan of ₹ 1,500 crore ($215 million) to meet its working capital needs, two people aware of the matter told Reuters.The airline has scheduled a meeting on 8 January with its vendors and lessors, many of whom are getting increasingly concerned over non-payment of dues, and SBI officials to discuss the debt restructuring plan, the first person said.
The bankers are being called to the meeting to reassure the creditors, some of whom are expected to come to India from overseas, that Jet Airways is working toward securing funding and has a repayment plan which it will share with them, said the first person.
Jet Airways, India’s biggest full-service carrier by market share, owes money to pilots, lessors, banks and vendors. Its problems have been exacerbated by higher oil prices and intense pricing competition in the domestic market.
The airline, part owned by Etihad Airways, was in talks with the Abu Dhabi-based carrier to infuse more equity, but any money would be conditional on Jet’s founder Naresh Goyal ceding control, the people have told Reuters.
Lessors have already forced the airline to ground at least four of its new fuel-efficient Boeing 737 MAX aircraft over non-payment of dues, the first person said, adding more planes could be grounded if lessors are unconvinced by the plan Jet Airways presents next week.
Jet Airways and SBI did not immediately respond to a request for comment.
Jet Airways has a total of 124 aircraft, the vast majority of which are leased.
The airline on Tuesday said it had defaulted on debt payment to a consortium of Indian banks, led by SBI, prompting ratings agency ICRA Ltd to downgrade the carrier and send its shares sharply lower.
SBI, which has an exposure to Jet Airways of about ₹ 1,600 crore, has in principle agreed to lend another ₹ 1,500 crore, the second person said, adding this is subject to the bank satisfactorily completing a forensic audit of the airline’s books—a process that started in December.
SBI is discussing securitizing part of the sales of Jet Airways’s tickets against subsequent loans, this person said, adding it will not be able to securitize the entire amount.
“The debt will give the airline some money for its operational needs but it will not solve the long term problem," said the first person.
India’s aviation watchdog, the Directorate General of Civil Aviation (DGCA), has asked to meet Jet Airways’s chief executive on 7 January to get an update on its financial state and fundraising plans to ensure non-payment of pilot salaries and other dues is not having an impact on safety, the first person said.
The DGCA did not respond to a request for comment.
The carrier is also late on salary payments to its employees for the month of December, the first source said.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.