Jet Airways, the largest loser among aviation stocks, as compared to a 3% fall in SpiceJet and 2% decline in InterGlobe Aviation at 01:40 pm. In comparison, the S&P BSE Sensex was down 1.5% at 35,141 points.
“The rating downgrade considers delays in the implementation of the proposed liquidity initiatives by the management, further aggravating its liquidity, as reflected in the delays in employee salary payments and lease rental payments to the aircraft lessors”, ICRA said.
Moreover, the company has large debt repayments due over the next four months (December-March) of FY2019 (Rs 17 billion), FY2020 (Rs 24.44 billion) and FY2021 (Rs 21.68 billion). The company is undertaking various liquidity initiatives, which includes, among others, equity infusion and a stake sale in Jet Privilege Private Limited (JPPL), and the timely implementation of these initiatives is a key rating sensitivity, it added.
Jet Airways continues to have negative net worth due to accumulated losses and diminution in the value of its investments in its subsidiary Jet Lite (India) Limited. Furthermore, the liquidity strain has aggravated due to delays by the company in the implementation of its liquidity initiatives, the rating agency said.
Jet Airways has underperformed the market by falling 26% from its recent high of Rs 347 on November 16, as compared to a 1% decline in the Sensex. The stock had more than doubled from its 52-week low level of Rs 163 on October 1, amid reports that the Tata Group was likely to acquire the struggling carrier. In comparison, the benchmark index down 3% during the same period.
However, Jet Airways has termed media reports of Tata group carrying out due diligence to acquire the airline as "speculative". "The subject news is speculative in nature and that there is no discussion or decision in the board which would require a disclosure,” the company said.