With the cleaning up of Jet Airways’ balance sheet seen crucial for its long-term viability and survival, banks are believed to be working on another plan for recapitalisation of the airline.
With more than $2 billion debt, including bank borrowings and dues to vendors, Jet Airways cannot be turned around without a large-scale capital infusion and debt reduction, company executives said.
“What is killing Jet Airways is the debt. The balance sheet has to be cleared up. See the contrast, IndiGo is sitting over $2 billion cash in its balance sheet and Jet has a debt of over $2 billion. How can it compete?” asked an airline official not wanting to be named.
“Most of our money was going towards debt repayment and finance costs. Otherwise, on an operational stand point, we are not terribly bad,” the official said.
“After cleaning up of the balance sheet, we are reasonably confident of achieving a turnaround. Otherwise, it will be a quick-fix solution that may not last long,” another senior official said. Realising this, lenders are believed to be working on an alternative plan.
Lenders led by the State Bank of India (SBI) have reportedly come up with a new plan to mobilise ₹9,535 crore funding for the airline. This includes ₹3,800 crore as equity infusion by two new investors.
As per the plans, a rights issue will mobilise additional capital and there will be complete exit of promoter Naresh Goyal and strategic investor Etihad Airways, whose shares will be transferred to a trust to be managed by the lenders.
More details and confirmation on this were not available till the time of going to press. Emails sent to Jet Airways and Etihad Airways as to whether the reported new plan was acceptable to them remained unanswered till going to the press.
Though a week has gone by since the second resolution plan was passed, there has been no word from the lenders on the proposed additional loan of ₹1,500 crore to the cash-strapped airline.
Amid further uncertainty Jet Airways’ shares on Monday closed with a loss of 1.26% at ₹265.95 on the BSE.
