Jet Airways India seems rescued from brink by lenders offering bail-out
TROUBLED Jet Airways India may be rescued after lenders proposed a bailout plan, potentially paving the way for a revival of the near-insolvent, Bloomberg reports
TROUBLED Jet Airways India may be rescued after lenders proposed a bailout plan, potentially paving the way for a revival of the near-insolvent, Bloomberg reports.
Jet Airways which needs INR85 billion (US$1.2 billion), has arranged that the banks will now be the biggest shareholders, according to a filing.
The restructuring would involve a mix of debt-to-equity swap, new capital infusion and asset sales, the company said, without elaborating.
Mumbai-based Jet Airways, one of the first private Indian airlines to dominate the local market after the government ended a state monopoly, has accumulated more losses than any publicly traded Asian carrier apart from Pakistan International Airlines Corp.
The proposed bailout plan needs approvals from lenders, a banking industry group, founder Naresh Goyal and the board of Etihad Airways PJSC, which owns 24 per cent of the carrier, according to the statement.
Jet Airways has called for an extraordinary general meeting on February 21 to seek shareholders' consent to name lenders' nominees to the board.
Banks will own 114 million shares of Jet Airways after the restructuring. The company statement didn't say how much Goyal and Etihad would hold. The founder-chairman currently owns 51 per cent.
The rescue package is reminiscent of a similar bailout for Kingfisher Airlines in 2011, when lenders including SBI converted existing debt into the loss-making company's shares. But the carrier shut down three years later.
Although banks, with their newly acquired stake in Jet Airways and representation on the board, will have more say in its operations, the Kingfisher episode illustrates the perils. Lenders in India have already been under pressure from regulators to clean up about $120 billion of soured debt.