Punjab National Bank has reportedly given Jet a ₹20.5 billion lifeline to keep it airborne
- The state-owned
Punjab National Bankhas reportedly extended a ₹20.5 billion loan to Jet to keep it operational.
- The funds are mainly for working capital purposes and will be hence be used to pay salaries to airline staff and pilots and more importantly, pay lessors of aircrafts.
- The loan comes amid talks between Jet’s shareholders and creditors to finalise a resolution plan for the airline.
As the promoters and creditors of
The emergency funding is split in two parts - foreign currency loans of ₹11 billion and a credit facility of ₹9.5 billion. It has been secured against Jet’s liquid assets, including four flight training simulators and its trade receivables.
AdvertisementThe funds are mainly for working capital purposes and will be hence be used to pay salaries to airline staff and pilots and more importantly, pay lessors of aircrafts. Nearly 50 out of 119 Jet aircrafts are currently grounded due to non-payment of rental dues to lessors - which has hurt Jet’s credit rating.
Last week, FLY Leasing, one of Jet’s lessors, said it would deploy its planes elsewhere if Jet’s shareholders and creditors didn’t finalise a resolution plan by the end of March. The grounding of planes has led to a cancellation of flights, which has in turn, led to a continued decline in revenues and profits, furthering endangering the airline’s recovery.
A sticking point in the negotiations between Jet’s creditors and promoters had been the role of airline owner Naresh Goyal. At the end of February, a meeting of Jet’s creditors and partner Etihad on February 28th paved the way for Goyal’s decision to step down as the airline’s chairman.
The next hurdle in the resolution plan involves Jet’s creditors trying to convince Etihad to take greater operational control of the airline. As one of Jet’s major lenders, the loan from
AdvertisementJet’s chairman finally agrees to step down, paving way for bank-led bailout
The threat of bankruptcy forces Etihad and Naresh Goyal to call for truce
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