Jet Airways to receive emergency funding of Rs. 500 crore

Dnyanada Kulkarni
/ Categories: Trending, DSIJ News
Jet Airways to receive emergency funding of Rs. 500 crore

Jet Airways is likely to receive emergency funding of Rs. 500 crore from State Bank of India (SBI) and Punjab National Bank (PNB) to help the debt-laden company continue its operations. 

However, the funding will be extended provided the consortium of lenders does not raise any objection. 

Presently, Jet Airways is struggling under a monumental debt burden of Rs. 8,000 crore, of which Rs. 2,000 crore is owed to its largest lender, SBI. 

So far, only SBI and PNB have offered funding. Although there is no official confirmation, SBI is rumoured to be the one providing the major chunk of funding. The other lenders are not willing to pitch in. 

The fresh debt is intended to be ranked at higher seniority. This means it will be awarded first priority for the purpose of loan recovery. That is why it requires the approval of other lenders. 

SBI proposed a provisional resolution plan earlier this month. The idea is to convert some part of the debt into 114 million shares by paying a token of Re 1 per share in line with the RBI restructuring guidelines. This will award the lenders a majority 50.1 per cent shareholding in the company. 

However, the lenders have not yet approved this proposal. This makes it even more essential for the company to receive the emergency funding. 

In the meantime, Jet Airways incurred a heavy loss of Rs. 588 crore for the fourth consecutive quarter during the October to December period. Although its revenues increased, its EBITDA slumped 54.33 per cent YoY to Rs. 459.50 crore. 

To make matters worse, Jet Airways defaulted on loan repayments in December while also delaying salary payments for several months. As a result, it has been identified as a safety risk in a regulatory audit. 

The struggling airline has also apparently postponed deliveries of Boeing 737 MAX planes that were supposed to join its fleet by March. Flights have also been withdrawn as a cost-saving measure and due to lessors taking back planes.  

On Friday, the shares of Jet Airways opened at Rs. 238.50, and hit a high and low of Rs. 242.45 and Rs. 235.40, respectively. The stock closed at Rs. 236.70, up 0.79 per cent. 

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