Monday, November 23, 2020

Creditors unwilling to fund Jet Airways' restart

Lenders are hesitant to inject any fresh funds into Jet Airways to finance the airline's planned resurrection under new ownership.

Two sources in the financial sector told Live Mint that lenders are in principle unwilling to get involved in the airline sector in India at this time. In particular, they are worried that Jet Airways would require sizeable investment beyond the funds pledged by its new owners to restart, as planned, in April 2021, two years after the airline's collapse.

The new owners have not, thus far, made any formal overtures to banks for more funding. However, as it stands, they may have to resort to using their own resources to finance the carrier's restart.

Out of Jet's total debts of over INR250 billion rupees (USD3.4 billion), around INR80 billion (USD1.1 billion) is due to various financial creditors. Under the recently outlined resolution plan, the lenders are expected to take a 90% haircut on these debts. They would also be able to convert the unsustainable debts into equity, including a 9.5% in Jet Airways itself and a 7.5% in its once profitable loyalty programme Jet Privilege, now renamed InterMiles.

23/11/20 ch-aviation


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