Monday, January 07, 2019

Jet Airways seeks to rework vendor contracts to cut costs

Debt-laden Jet Airways. is trying to renegotiate contracts with its vendors as lenders demand a revival plan by month-end from India’s second-largest airline by passengers, according to people with knowledge of the 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 the people, who asked not to be identified as the discussions aren’t public. Lenders have said any short-term loan to keep the carrier afloat would be based on the plan proposed by Jet Airways and its equity partner Etihad Airways PJSC, according to the people.
The beleaguered Indian carrier missed an interest and principal repayment at the end of last year, giving it about 90 days to clear the dues and avoid being declared a non-performing asset. State Bank of India, the nation’s largest lender, is hosting another round of meetings with the Jet Airways management and vendors on Tuesday to find common ground, the people familiar said.
Jet Airways didn’t have any immediate comment when contacted on Monday.
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 the airline missed a payment due on Dec. 31 to a consortium of Indian banks led by State Bank of India “due to temporary cash flow mismatch.”
07/01/19 by P R Sanjai and Saloni Shukla /Bloomberg/Economic Times