Jet to approach lenders with fresh funding proposal

By Rohit Vaid

Mumbai, April 23 (IANS) Temporarily grounded Jet Airways is expected to make yet another plea for an interim funding of at least Rs 250 crore to its lenders to restart bare minimum operations till May 10.

The development assumes significance as the lenders have called for binding bids from potential investors by May 10 and have been unwilling to extend any further fund infusion into the airline, despite holding pledged shares of the promoter and appropriate collateral required for fresh funding.

"The airline management is expected to formally approach lenders once more with a request of an interim funding tranche," an airline insider told IANS from Mumbai.

"These funds are expected to be used to re-start operations as soon as possible with around 3-4 aircraft and till May 10."

The development assumes significance as lenders have asked eligible parties to send in their binding bid proposals for stake sale in the airline.

However, such a move might not yield much, feel banking industry insiders as legally the lenders cannot give any interim funding to the airline which already owes around Rs 8,000 crore.

Industry estimates have placed the total debt excluding liabilities to vendors and employees at more than Rs 11,000 crore.

The figures include interest accrued on lenders loans, external commercial borrowings and non-convertible debentures (NCDs).

Earlier, the airline had put forth a plan for interim funding to the consortium of Indian lenders worth Rs 983 crore. But this plan was rejected.

Consequently, on April 17, Jet was forced to announce a temporary suspension of all flight services as it was unable to maintain even bare minimum operations.

Prior to temporarily suspending all flight services, Jet had already folded up most of its operations due to grounding of around 90 per cent of its fleet by lessors, as its consortium of lenders refused to extend loans to the airline, despite co-signing the resolution plan, after multiple unilateral iterations from their end.

On its part, Jet in a regulatory had said that the SBI told the airline that consortium of lenders are unable to consider the private carrier's request for critical interim funding.

"Since no emergency funding from the lenders or any other source is forthcoming, the airline will not be able to pay for fuel or other critical services to keep the operations going," the filing said.

"Consequently, with immediate effect, Jet Airways is compelled to cancel all its international and domestic flights. The last flight will operate today (April 17)."

(Rohit Vaid can be contacted at rohit.v@ians.in)