The lenders of Jet Airways are reluctant to extend additional loans to the cash-strapped airline ahead of a key report by the company’s financial auditor, reports said. India’s biggest full-service carrier, part-owned by Etihad Airways PJSC, had approached banks for emergency funding but the lenders prefer that the company raises money from a share sale before they would commit to any fresh credit, said one source. Lenders are waiting for auditors’ endorsement of financial accounts after the airline delayed its earnings announcement last week, sources said.
A spokesman for Jet Airways didn’t respond to emails and calls seeking comments on its efforts to repay borrowings. In a separate statement, the airline said it’s been evaluating funding options to meet liquidity requirements “on priority” and proactively working on multiple revenue enhancement and cost-cutting measures. Jet Airways is seeking to bolster its finances after reporting a loss in the year ended March 31. Rising jet fuel prices have eroded cash and inflated its total debt to 55.4 times earnings before interest and tax as of March. The carrier said that the audit committee didn’t recommend financial results for the board’s approval, “pending closure of certain matters.”
Shares of Jet Airways fell as much as 2.3 per cent on Tuesday in Mumbai. They have tumbled about two-thirds this year, headed for their biggest decline since 2011, and are trading at their lowest level since June 2015.
NSC seeks clarification
The National Stock Exchange of India sought clarification from the company on why the results have been delayed and told Jet Airways to disclose the fresh date for its earnings. State Bank of India, HSBC Holdings Plc and Axis Bank Ltd. are among lenders to the Mumbai-based carrier, which owes a total 94.3 billion rupees ($1.4 billion). It had cash and equivalents of 3.2 billion rupees at the end of March. A spokesman for HSBC declined to comment. Representatives for SBI and Axis Bank didn’t respond to calls and emails seeking comments.
Jet Airways has 31.2 billion rupees worth of loan repayments due in the year through March 2019, ICRA Ltd. said in May. The local unit of Moody’s Investors Service also lowered the airline’s rating a notch to BB+ with a negative outlook, a level that signals moderate risk of default regarding timely servicing of obligations, citing its inability to pass on increasing fuel costs to consumers.
