Jet may secure ₹1,500 cr SBI loan soon
NEWDELHI: 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 to meet its working capital needs, two persons aware of the matter told Reuters.
The airline has scheduled a meeting on January 8 with its vendors and lessors, many of whom are getting increasingly concerned over non-payment of dues, and officials from SBI to discuss the debt restructuring plan, the first person with direct knowledge 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 is working toward securing funding and has a repayment plan which it will share with them, said the first person.
Jet, 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, people familiar with the matter 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 presents next week. Jet Airways and SBI did not immediately respond to a request for comment.
Jet 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 to downgrade the carrier and send its shares sharply lower.
SBI, which has an exposure to Jet of about ₹1,600 crore, has in principle agreed to lend another ₹1,500 crore, the second Mumbaibased 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’s tickets against subsequent loans, the Mumbai-based 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.