Mumbai: Jet Airways is set to benefit from the Reserve Bank of India’s (RBI) decision to allow airlines to raise working capital through the external commercial borrowings (ECBs) route till March 2015.
The RBI, on Wednesday, extended this facility that was first granted in Union Budget 2012-13 presented in March 2012 to help cash-strapped airlines to tap foreign capital. However, in these two years, not a single airline could raise ECB due to their weak credit rating.
As per RBI’s guideline, airlines collectively can raise $1 billion in ECB while an individual airline can raise a maximum of $300 million.
With this extension, Jet Airways would be the sole likely beneficiary as it was backed by financially-sound Etihad Airways, said experts.
“Jet Airways has been in the market to raise $300 million ECB for long. With this extension, we expect Jet should close the deal this year. Etihad is willing to provide guarantee for $150 million ECB and that should get through. The balance $150 million ECB can be raised without any guarantee due to Jet’s strong alliance with Etihad,” Kapil Kaul, CEO, South Asia, Centre for Asia Pacific Aviation, told
27/03/14 Lalatendu Mishra/The Hindu
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The RBI, on Wednesday, extended this facility that was first granted in Union Budget 2012-13 presented in March 2012 to help cash-strapped airlines to tap foreign capital. However, in these two years, not a single airline could raise ECB due to their weak credit rating.
As per RBI’s guideline, airlines collectively can raise $1 billion in ECB while an individual airline can raise a maximum of $300 million.
With this extension, Jet Airways would be the sole likely beneficiary as it was backed by financially-sound Etihad Airways, said experts.
“Jet Airways has been in the market to raise $300 million ECB for long. With this extension, we expect Jet should close the deal this year. Etihad is willing to provide guarantee for $150 million ECB and that should get through. The balance $150 million ECB can be raised without any guarantee due to Jet’s strong alliance with Etihad,” Kapil Kaul, CEO, South Asia, Centre for Asia Pacific Aviation, told
27/03/14 Lalatendu Mishra/The Hindu
