DNA Money Edit: Jet Airways needs to avoid air pockets

The fall in aviation turbine fuel price has not brought any solace to the debt-laden Jet Airways. Once one of the biggest aviation companies in the country, Jet has defaulted on loan repayment to a consortium of banks led by State Bank of India (SBI) after reporting three consecutive quarterly losses of over Rs 1,000 crore each. The beleaguered airline is in talks with lenders, lessors and potential buyers for a viable turnaround plan. 

As it struggles to sustain its already-fragile operations, lenders have reportedly proposed a $900 million resolution plan, involving fresh equity infusion and restructuring $450 million of loans. The consortium of lenders on Tuesday met Jet's founder-chairman Naresh Goyal and a representative of Etihad Airways, which holds a 24% stake in the airline, to breathe a fresh life into the carrier. Lenders are of the opinion that the promoter should step down and reduce his family holding in Jet Airways. The plan, if approved by all stakeholders, may trigger a change in the airline's shareholding, with Goyal's stake nearly halving to 26% and SBI holding over 20%.

Jet faces a big dilemma as it loses more money than it earns and struggles with salary payments. The lenders continue to be wary of Jet's mounting debt pile, which stood at Rs 8,052 crore as of September 2018, according to the airline's balance-sheet. As a large portion of that debt is dollar-denominated, a volatile rupee will continue to play a key role.