Comments
Debt-laden Jet Airways seems to be lurching from one crisis to another. Credit rating agency ICRA has downgraded the Naresh Goyal-led airline once again. This comes after the airline defaulted on payment of an interest and principal instalment due on December 31 to a consortium of Indian banks led by State Bank of India. This is the second time that the agency has downgraded it in a month.
In a statement, Jet Airways said the delay in payment was due to a “temporary cashflow mismatch”, without disclosing any further details. Sources close to the company said that provisions are being made to repay the debt in a few days.
ICRA, in its report, stated that there have been delays in the implementation of the proposed liquidity initiatives by the management, which have aggravated funding availability. “The company has already been delaying its employee salary payments and lease rental payments to aircraft lessors. Furthermore, the company has large debt repayments due over December 2018 to March 2019 (₹1,700 crore), FY2020 (₹2,444.5 crore) and FY2021 (₹2,167.9 crore),” ICRA said in its report.
Jet Airways shares had plummeted 6.16 per cent to ₹263.75 apiece on BSE at close on Wednesday.
The airline was granted a loan of ₹100 crore in December 2015. The principal instalment was due on December 31, 2018, at an interest rate of 6.19 per cent. The next schedule of payment of the principal instalment along with interest is due on February 13, 2019, for a loan of ₹200 crore with an interest rate of 7.26 per cent.
SBI is the lead banker for the airline’s loans of over ₹8,400 crore. Of this, SBI’s exposure to the airline is said to be close to ₹2,000 crore. Following a complaint, last month, the bank initiated a forensic audit of the airline’s financials for fiscal years 2014 to 2018.
The airline has been facing a financial crunch for the past several months. It reported a net loss of ₹1,261 crore for the second quarter of FY19. As on September 30, 2018, Jet Airways had a gross debt of ₹8,411 crore, as against ₹8,403 crore as on March 31, 2018. The airline has also defaulted on salary payments to its employees, engineers, pilots, and vendors.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.