Jet Airways stock dropped 67% last year and was among worst performers in SP BSE 500 Index.Debt-laden Jet Airways is trying to renegotiate contracts with its vendors as lenders demand a revival plan by month-end from country's second-largest airline by passengers, according to people with knowledge of discussions.The Naresh Goyal-led airline is in talks to defer or reduce payments to vendors including aircraft lessors and those providing engineering, spare parts, credit card and airport services, said one of people, who asked not to be identified as discussions aren't public.
Lenders have said any short-term loan to keep carrier afloat would be based on plan proposed by Jet Airways and its equity partner Etihad Airways PJSC, according to people.The beleaguered carrier missed an interest and principal repayment at end of last year, giving it about 90 days to clear dues and avoid being declared a non-performing asset.
State Bank of India, nation's largest lender, is hosting another round of meetings with Jet Airways management and vendors on Tuesday to find common ground, people familiar said.Credit assessor ICRA has cut its rating on Jet Airways's loans and bonds to D, a score that signifies that borrowers are in default or are expected to be soon.
The downgrade came after airline missed a payment due on December 31 to a consortium of Indian banks led by State Bank of India "due to temporary cash flow mismatch.""Jet Airways remains optimistic about outcomes with regard to discussions with its lenders," company said in an emailed statement on Monday.
"The talks are progressing well and we hope to reach a positive resolution at earliest."The Mumbai-based Jet Airways hasn't seen a profit in nine of past 11 fiscal years owing to intensifying fare wars that worsened a cash crunch.
The company reported its third straight quarterly loss in November with surging liabilities that signaled a deepening of financial distress.
It has fallen behind on payments to staff and lessors.The carrier has been talking to its foreign equity partner Etihad Airways and a clutch of financial investors to avoid potential defaults to lenders and lessors.
It has also sought a short-term loan of Rs 1,500 crore ($215 million) from State Bank of India for working capital and bank is currently conducting a forensic audit for possible approval of such a facility.In last couple of months, Jet Airways Founder and Chairman Naresh Goyal, along with Etihad Airways Chief Executive Officer Tony Douglas, met Rajnish Kumar, chairman of State Bank of India, multiple times at lender's Mumbai headquarters to explore a resolution mechanism.The carrier's stock dropped 67 per cent last year and was among worst performers in SP BSE 500 Index.