Debt-ridden Jet Airways accepts deal by lenders to plug funding gap

The board of Jet Airways Ltd has approved a plan by its lenders to resolve a near Rs85 billion (Dh4.41 billion) funding gap, which will make them the largest shareholders of India’s biggest full-service carrier, Jet said yesterday.

Jet, saddled with over $1 billion in debt, had a rough 2018 as competition intensified in the Indian airline market, the rupee depreciated and high oil prices squeezed margins.

The rescue deal by Jet’s lenders, led by State Bank of India, includes funding through a mix of equity infusion, debt restructuring and sale or leaseback of aircraft.

The plan gives lenders the ability to appoint nominees to the airline’s board.

Jet said that after its approval the plan will be presented back to the lenders, as well as to an overseeing committee of the Indian Bankers’ Association, the board of shareholder Etihad Airways and Jet’s founder and chairman Naresh Goyal.

Etihad, which owns 24 per cent of Jet, bailed out the airline in 2013, paying $600 million for a 24 per cent stake in Jet, three take-off and landing slots in London Heathrow and a majority share in Jet’s frequent flyer programme.

Losses mount

Jet yesterday reported Rs5.87 billion stand-alone net loss for the third quarter. It had reported a net profit of Rs1.65 billion during the year-ago period.

“Despite improvement in RASK (revenue per available seat kilometre), which grew 2.6 per cent over the third quarter of FY18 due to seasonal, demand-led strengthening of fares, higher costs because of the price of Brent crude (up 29 per cent) and the depreciated Indian rupee impacted the airline’s business performance,” the company said.