Jet needs emergency funding of ₹4 billion to stay airborne until a buyer swoops in


  • The airline reportedly needs ₹4 billion from its creditors to stay operational in the immediate term as its promoters weigh bids for a majority stake in the airline.
  • Jet’s board of directors met on Tuesday to decide whether Jet should still continue operations but were unable to reach a consensus.
  • The board meeting came a day after Jet’s creditors, led by the State Bank of India, were unable to reach a decision on the emergency infusion of ₹15 billion in the airline’s operations.
  • Some creditors asked for more equity and collateral guarantees in lieu of financing.

It’s crunch time for Jet. The airline reportedly needs ₹4 billion from its creditors to stay operational in the immediate term as its promoters weigh bids for a majority stake in the airline.

Jet’s board of directors met on Tuesday to decide whether Jet should still continue operations but were unable to reach a consensus. Sources told Mint that some of Jet’s senior managers were in favour of a temporary shutdown if not emergency funding came through.

At the start of the week, it had only seven functional planes - after starting the year with 119 - and barely any cash.

The lack of funding has translated in a grounding of flights, the non-payment of salaries to airline staff and repossession of planes by vendors.

The board meeting came a day after Jet’s creditors, led by the State Bank of India, were unable to reach a decision on the emergency infusion of ₹15 billion in the airline’s operations. Some creditors asked for more equity and collateral guarantees in lieu of financing.

What they did seem to agree on, however, was that it didn’t make financial sense to keep Jet running in its current state. The cash burn just wasn’t sustainable. And the airline’s debt burden of $1.2 billion is adding up.

In the absence of funds, Jet’s international operations have been on hold till at least April 18th.

To make matters worse, the airline’s competitors have been quick to capitalise on its international time-out. SpiceJet has reportedly taken over seven of the carrier’s international routes such as Hong Kong, Colombo and Kathmandu.

The latest development comes as SBI evaluates expressions of interest from companies to take a stake in the airline - giving it a much-needed capital infusion.

A complete grounding of operations will endanger the sales process - something Jet’s promoters and creditors obviously wished to avoid.

A number of players have shown interest, the likes of which include Etihad, TPG Capital and even the Indian government’s National Investment and Infrastructure Fund (NIIF). SBI Capital, the bank’s investment banking arm, is expected to shortlist bidders soon. The interested parties will have until May 10th to submit concrete bids.


SEE ALSO:

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Bidding process begins for troubled carrier Jet Airways

Etihad makes dramatic U-turn with intention to raise stake in ailing Jet Airways
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