Jet seeks new terms for $2 billion loan

New Delhi: Jet Airways, India’s largest privately-owned airline, has approached the US Exim Bank and European export credit agencies to reschedule a $2 billion loan (Rs 10,000-crore) loan that was raised to buy 27 Boeing and eight Airbus aircraft.
With operating losses mounting to Rs 1,237.34 crore in the first three quarters of 2008-09, as a result of slowing passenger traffic, Jet is finding it difficult to meet the annual repayment obligation of Rs 1,200 crore (principal of Rs 900 crore plus interest of Rs 300 crore) on these loans. The annual interest rate on these loans is 4 to 5 per cent.
Jet also has debt obligations of around Rs 5,000 crore from Indian banks. Of this, it raised Rs 2,000 crore in the last two quarters to cover part of its operational expenses.
The airline, therefore, has an overall debt exposure of Rs 15,000 crore on a net worth of Rs 3,063 crore, giving a gross debt-to-equity ratio of 4.13 times. Jet’s plans to mop up $400 million in 2008 to bolster its net worth were indefinitely deferred, owing to poor market conditions.
Sources close to the development said US Exim Bank extended Jet a guarantee of around $1.3 million to buy six wide-bodied Boeing 777, orders for which were placed in 2007-08, and 21 Boeing 737 aircraft. These loans typically have 12-year repayment schedules, sources said.
25/04/09 Arun Kumar/Business Standard

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Categories: Jet Airways Apr 2009