Eti­had in talks with banks for Jet Air­ways res­cue

Financial Chronicle - - FRONT PAGE - FC BU­REAU

PART­NER Eti­had could come to the res­cue of ail­ing Jet Air­ways. The two have jointly be­gun talks with cred­i­tors to get eas­ier terms on loan re­pay­ment.

The Abu Dhabi-based car­rier, Jet Air­ways’ sec­ond-largest share­holder with 24 per cent stake, may raise its cur­rent eq­uity hold­ing, tak­ing it to up to 49 per cent, the high­est per­mis­si­ble limit for for­eign air­lines.

“The air­lines are tak­ing to banks on cash flow and busi­ness plan,” said an in­dus­try ex­ec­u­tive.

The devel­op­ment points to de­te­ri­o­rat­ing fi­nan­cial health of Jet Air­ways, which has been forced to with­draw dozens of flights to con­tain losses. It also re­minds one of the cri­sis in 2012 that forced Vi­jay Mallya-run King­fisher Air­lines out of busi­ness.

Days be­fore go­ing belly up, King­fisher Air­lines was can­celling dozens of flights as it did not have cash to buy even fuel and dis­burse em­ploy­ees’ salaries. Its des­per­ate at­tempts to raise funds failed mis­er­ably even­tu­ally, lead­ing to its clo­sure.

Jet Air­ways has also been find­ing it tough to pay salaries to its em­ploy­ees and owe as much as $400 mil­lion to lessors and ven­dors. It is also fac­ing the wrath of pi­lots for non-pay­ment of salaries.

Jet Air­ways has been in the spot­light in re­cent days with spec­u­la­tion of pro­moter Naresh Goyal hold­ing dis­cus­sions with prospec­tive in­vestors such as Tata Group, Eti­had Air­ways PJSC and a con­sor­tium of Air France-KLM and Delta Air Lines. But none of them has so far pro­gressed beyond talks.

Last month, Tata group termed its talks with Jet for ac­quir­ing a ma­jor­ity stake as pre­lim­i­nary after re­main­ing silent for a few weeks.

Jet Air­ways has posted loss for the last three con­sec­u­tive quar­ters on ris­ing fuel price and fierce com­pe­ti­tion in the lo­cal mar­ket. The air­line re­ported a net loss of Rs 1,261 crore dur­ing the Septem­ber quar­ter.

As com­pe­ti­tion in the do­mes­tic mar­ket re­mains fierce the sit­u­a­tion is un­likely to get bet­ter any­time soon. Seek­ing to bol­ster its cash flow, the air­line on Wed­nes­day re­duced its base fares by up to 30 per cent for both do­mes­tic and in­ter­na­tional travel across its net­work un­der a lim­ited pe­riod of­fer.

Mean­while, avi­a­tion reg­u­la­tor DGCA has ap­proved the flight sched­ule of Jet Air­ways for five months. The watch­dog mon­i­tors op­er­a­tions of an air­line through a sys­tem­atic pro­ce­dure of sur­veil­lance, reg­u­la­tory au­dits and spot checks.

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