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Crisis-hit Jet Airways defaults on foreign loan repayment

Press Trust of India  |  New Delhi/Mumbai 

Cash-strapped Monday defaulted on foreign loan repayment due to liquidity crunch, amid seeking Rs 750 crore in urgent funding from its strategic partner citing the airline's "very precarious" position.

The domestic airline, which has been in service for 25 years, has been grappling with acute financial woes that have forced it to ground around 50 planes while salaries of many employees have been delayed.

"... the part repayment of the external commercial borrowing availed by the company, for working capital purposes, falling due on March 11, 2019, has been delayed owing to temporary liquidity constraints," the said in a filing to stock exchanges.

Specific details about the borrowings were not disclosed.

The company has engaged with the lender in relation to the same, the filing added.

The development also comes on a day when Etihad Airways, which has 24 per cent stake in Jet Airways, is holding its board meeting in

has a debt burden of more than Rs 8,000 crore and has been looking at various ways to raise funds.

On March 8, Goyal wrote to Group seeking an urgent funding of Rs 750 crore.

In a letter, Goyal also said the has also secured the go-ahead from the civil ministry to pledge its shares in for securing the interim funding.

The holds 49.9 per cent stake in the loyalty programme while the majority is with Etihad.

According to the letter, is in a very precarious position, with more than 50 aircraft being grounded and increasing arrears of vendors and salaries.

is likely to infuse around Rs 1,600-1,900 crore into cash-strapped Jet Airways under a proposed deal wherein Goyal would step down as of the domestic carrier, according to sources.

Under a proposed deal, Goyal would step down as and director of Jet Airways but can nominate two people to the airline's board. Goyal would be designated as while his son would be offered an appropriate position subject to certain conditions, the sources said.

By infusing Rs 1,600-1,900 crore, Etihad's stake in Jet Airways would rise to 24.9 per cent, the sources said citing a Memorandum of Understanding (MoU) between the two

Currently, Etihad has 24 per cent stake in the domestic airline.

Besides, a new investor is likely to pump in around Rs 1,600-1,900 crore into the domestic carrier. Lenders are expected to infuse Rs 1,000 crore wherein their shareholding would be around 29.5 per cent, as per the sources.

In the revamped board, there would be a total of 12 members, including two nominees each of Goyal and Etihad, they added.

Last month, shareholders of Jet Airways cleared approved conversion of loan into shares and other proposals.

On February 14, Jet Airways' board approved a Bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become the largest shareholders in

Following approval from the shareholders, part of debt would be converted into 11.4 crore shares at a consideration of Re 1 apiece as per the RBI norms.

On Monday, shares of Jet Airways Monday settled with over 2 per cent gains following reports that it has secured loan worth over Rs 2,000 crore from (PNB).

In a clarification to stock exchanges, said it has existing credit facilities of USD 300 million from No fresh credit facilities, as reported, have been provided by the bank, it added.

Separately, on Monday, Jet Airways said it is not operating any of the five 737 MAX in its fleet.

The statement of came against the backdrop of regulator DGCA asking to undertake safety assessment of 737 MAX aircraft following the crash of such a plane in on Sunday.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, March 11 2019. 23:46 IST