Jet Airways has a total of 124 aircraft, vast majority of which are leased.Debt-laden Jet Airways is close to reaching a deal with State Bank of India for a fresh loan of Rs 1,500 crore ($215 million) to meet its working capital needs, two sources aware of matter told Reuters.
The airline has scheduled a meeting on January 8 with its vendors and lessors, many of whom are getting increasingly concerned over non-payment of dues, and officials from State Bank of India (SBI) to discuss debt restructuring plan, first source with direct knowledge said.The bankers are being called to meeting to reassure creditors, some of whom are expected to come to India from overseas, that Jet is working toward securing funding and has a repayment plan which it will share with them, said first source.
Opinion: Jet Airways Needed Just One Rupee to Avoid This TailspinJet, country's biggest full-service carrier by market share, owes money to pilots, lessors, banks and vendors.
Its problems have been exacerbated by higher oil prices and intense pricing competition in domestic market.The airline, part owned by Etihad Airways, was in talks with Abu Dhabi-based carrier to infuse more equity, but any money would be conditional on Jet's founder Naresh Goyal ceding control, sources have told Reuters.Lessors have already forced airline to ground at least four of its new fuel-efficient Boeing 737 MAX aircraft over non-payment of dues, first source said, adding more planes could be grounded if lessors are unconvinced by plan Jet presents next week.Jet Airways and SBI did not immediately respond to a request for comment.Jet has a total of 124 aircraft, vast majority of which are leased.Payment DefaultsThe airline on Tuesday said it had defaulted on debt payment to a consortium of Indian banks, led by SBI, prompting ratings agency ICRA to downgrade carrier and send its shares sharply lower.SBI, which has an exposure to Jet of about Rs 1,600 crore, has in principle agreed to lend another Rs 1,500 crore, second Mumbai-based source said, adding this is subject to bank satisfactorily completing a forensic audit of airline's books - a process that started in December.SBI is discussing securitising part of sales of Jet's tickets against subsequent loans, Mumbai-based source said, adding it will not be able to securitise entire amount."The debt will give airline some money for its operational needs but it will not solve long term problem," said first source.Aviation watchdog, Directorate General of Civil Aviation (DGCA) has asked to meet Jet's CEO on January 7 to get an update on its financial state and fund-raising plans to ensure non-payment of pilot salaries and other dues is not having an impact on safety, first source said.The DGCA did not respond to a request for comment.The carrier is also late on salary payments to its employees for month of December, first source said.($1 = Rs 69.74)