Thursday, February 07, 2019

Debt-ridden Jet Airways sells loyalty miles to raise Rs 250 crore

Mumbai: Jet Airways has secured Rs 250 crore from advance sale of redemption miles to its associate firm. The airline is also in discussion with lenders for short-term loans. The board of Jet Privilege Private Limited (JPPL), the company managing the loyalty programme, approved the transaction on Tuesday.

The airline has also received Rs 250 crore as interim funding from promoter Naresh Goyal, who is negotiating a resolution plan with its strategic partner Etihad Airways and lenders. Banks are expected to convert debt into equity and infuse fresh capital in the airline, which is facing a serious cash crunch and has defaulted on payments to lessors, vendors and staff salaries. A senior executive from a public sector bank said consortium leader (State Bank of India) is likely to extend Rs 200 crore as an immediate financial assistance. “This amount will help to run the operations. A clear picture will emerge in the middle of the next week,” he said.

Goyal is expected to step down as the airline’s chairman and negotiations are underway on issues like board composition and rights, governance mechanisms. A due diligence of the airline is underway.

JPPL is co-owned by Etihad and Jet. Etihad is a majority owner of the company and it holds 50.5 per cent stake. Last October, too, the airline had sold redemption miles for the full year to JPPL to earn Rs 250 crore. An another transaction was proposed to enable the airline to raise cash urgently and pay all its dues. “Etihad wanted certain conditions met and those were approved,” a source said.
07/02/19 Aneesh Phadnis/Business Standard