Jet to raise $300 mn through ECB

Company unaffected on revenue due to FAA action

Jet Airways on Monday said it would raise $300 million (about Rs 1,800 crore) through external commercial borrowings (ECBs) to retire high-cost debt.

“We have received the necessary approvals from the Reserve Bank to raise $150 million through the ECB route. We expect to complete the transaction this quarter. We are also working on another ECB transaction of $150 million,” said Ravishankar Gopalakrishnan, the airline’s acting chief executive.

The proceeds from the two ECB programmes, along with a few low-cost loans raised from the domestic market, would help the airline cut its high-cost debt, Gopalakrishna said, adding, “We should be in a significantly better position at the end of March.”

The airline said the downgrade of India’s safety ranking by the US wouldn’t have a significant impact on its revenue.

On January 31, the US Federal Aviation Administration had downgraded India’s safety rating to category 2. This meant Jet and Air India, the only two Indian carriers flying to the US, couldn’t increase flights to that country. Subsequently, United Airlines, which had a code-share pact with Jet, said it was suspending placing its code on Jet flights, effective February 1. Currently, Jet operates seven flights to the US every week.

“There is no restriction on Jet Airways placing its code on any US carrier's flight, including United’s. So, we do not expect a big reduction in revenue because of this downgrade,” said Raj Sivakumar, senior vice-president (alliances and planning), Jet.

“We are in the midst of replanning our strategy of offering consumers viable options into the US through the coming days and weeks,” Sivakumar said, replying to whether Jet would use Etihad’s network to add more flights to the US.

In November 2013, Etihad had invested Rs 2,057 crore for 24 per cent stake in the airline. Following the equity infusion, Jet reduced its debt from Rs 12,494 crore to Rs 10,895 crore.