Jet Airways lenders are wary of extending new loans
Banks prefer carrier raised money from a share sale
MUMBAI: Jet Airways India Ltd’s lenders are reluctant to extend additional loans to the cash-strapped airline ahead of a key report by the company’s financial auditor, according to people with direct knowledge of the matter.
India’s biggest full-service carrier, partowned by Etihad Airways PJSC, had approached banks for emergency funding but the lenders preferred that the company raised money from a share sale before they would commit to any fresh credit, said one of the people, who asked not to be identified as the matter is confidential.
Lenders are waiting for auditors’ endorsement of financial accounts after the airline delayed its earnings announcement last week, the people said.
A spokesman for Jet Airways didn’t respond to e-mails and calls seeking comments on its efforts to repay borrowings.
In a separate statement late Monday, the airline said it had been evaluating funding options to meet liquidity requirements “on priority” and proactively working on multiple revenue enhancement and cost-cutting measures.
Jet Airways is seeking to bolster its finances after reporting a loss in the year ended March 31. Rising jet fuel prices have eroded cash and inflated its total debt to 55.4 times earnings before interest and tax as of March.
The carrier said on Aug 9 that the audit committee didn’t recommend financial results for the board’s approval, “pending closure of certain matters.”
Shares of Jet Airways fell as much as 2.3% yesterday in Mumbai. They have tumbled about two-thirds this year, headed for their biggest decline since 2011, and are trading at their lowest level since June 2015.
The National Stock Exchange of India on Monday sought clarification from the company on why the results have been delayed and told Jet Airways to disclose the fresh date for its earnings. State Bank of India, HSBC Holdings Plc and Axis Bank Ltd are among lenders to the Mumbai-based carrier, which owes a total 94.3 billion rupees (US$1.4bil). It had cash and equivalents of 3.2 billion rupees at the end of March.
Jet Airways has 31.2 billion rupees worth of loan repayments due in the year through March2019,ICRALtdsaidinMay. —Bloomberg