Jet Airways crisis: Big relief! Airline receives Rs 2,050-cr loan from PNB

In a big relief, cash-strapped Jet Airways has reportedly secured fresh loans of Rs 2,050 crore from state-run Punjab National Bank (PNB). The loan in the time of fund crisis could provide a temporary relief to the Mumbai-based airline. According to a Mint report, Jet Airways has raised foreign currency term loans of Rs 1,100 crore and non-fund credit facility of Rs 950 crore from the state-run bank.

The money would be to cover working capital expenses such as paying rental dues to aircraft lessors and salary arrears, the report said citing sources.  The fund will help resume flights, which were grounded since February 8 because of non-payment of dues, and also credit rating.

The credit was raised in two tranches through separate agreements with PNB, it said. A credit facility of Rs 1,050 crore, including a term loan in dollars worth Rs 350 crore and a non-fund based facility of Rs 700 crore were agreed under the first agreement, while a credit facility of Rs 1,000 crore, includes a term loan of Rs 750 crore and a non-fund based facility of Rs 250 crore were agreed upon in the second agreement.

Jet Airways earlier said in its quarterly result that it incurred a total loss of Rs 3,208.23 crore in the nine months through December, with the negative net worth of Rs 10,370.24 crore. It reported total outstanding due of Rs 9,610.16 crore as of December 31, 2018.  The airline attributed this loss to various factors like high fuel prices, fluctuating currency rates, and tight liquidity conditions, among others.

Ratings agency Icra had downgraded Jet Airways’ credit ratings in September, October, December 2018 and January 2019. Following the deterioration of its financial state, the airline's founder and Chairman Naresh Goyal had to step down from his position and also diluted stakes in the company.  Goyal's stake will stand at 17 per cent from the existing 51 per cent, as the airline's board on February 23  approved the conversion of some of its loans into equity.