Jet unlikely to go far with $300 mn lifeline
MUMBAI: Jet Airways (India) Ltd may need to infuse fresh capital to sustain operations, given that most of the $300 million the airline raised in June may already have been exhausted.
A significant portion of this liquidity that came from lease incentives and borrowings from domestic banks has been utilized by the airline to pare debt during the June quarter. It could use the remaining amount in the current quarter, which is considered a lean period for travel, when revenues are expected to decline.
“Jet Airways needs at least ₹2,500-3,000 crore of cash in the coming quarters,” an analyst tracking the sector for a foreign brokerage said on condition of anonymity. He added that the airline could be in a tight spot if it could not raise funds.
Jet Airways has also delayed salary payments for July and August. It now plans to disburse the salary for August in two instalments in September, according to an internal note sent to employees by Rahul Taneja, the airline’s chief people officer. The same schedule is expected to be followed for September and October. The Mumbai-based airline cut its net debt by ₹700 crore sequentially to ₹7,364 crore as on June 30. It has scheduled debt repayments of ₹2,200 crore during the current fiscal year, Jet Airways’ chief financial officer, Amit Agarwal, said in a postearnings conference call with investors in August.
Jet Airways chief executive Vinay Dube had also told analysts that the airline was actively engaged in looking at various debt reduction and funding options, including capital infusion and monetization of assets, including the company’s stake in its loyalty programme.
An emailed query to Jet Airways on its fundraising plans did not elicit an immediate response.
“The airline can raise about ₹1,500 crore by monetizing the 50% stake in its frequent-flyer loyalty programme, Jet Privilege, and about $30-40 million each for its wide-body planes that it plans to sell and lease back,” said the analyst mentioned before.
Blackstone has expressed interest in a deal that could value Jet Privilege at ₹3,000-4,000 crore,
reported on August 16. Jet Airways, however, denied the news.