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Bloomberg
Jet Airways India Ltd. has approached banks for a moratorium on loans and asked for fresh funds to ease a cash cru-nch, according to people with direct knowledge of the matter, adding to signs the carrier is sliding deeper into trouble.
The airline has already gro-unded about a dozen planes as part of a review of its network aimed at reducing unprofitable domestic routes, said one of the people, who asked not to be identified because the plans aren’t public. The Mumbai-based carrier is also studying laying off more employees in non-core areas, the person said.
The moves show India’s biggest full-service carrier — unprofitable in nine of the past 11 years — is struggling for survival as two-cent fares in one of the world’s most expensive places to buy jet fuel negate the gains from a surge in domestic passenger numbers. Indian banks, having suffered setbacks from lending previously to failed Kingfisher Airlines, had earlier rebuffed Jet Airways with their reluctance to extend additional loans to the company.
A representative for Jet Airways couldn’t comment immediately. Shares of the company jumped as much as 4 percent on Tuesday in Mumbai, before paring their gains to 0.5 percent, on optimism any successful arrangement with lenders could help the carrier get its finances back in order.
Jet Airways has the highest portion of short-term debt to total debt compared to its Asian peers at 46%.
For Naresh Goyal-led Jet Airways, it’s critical to raise funds as the airline is battling a depreciating local currency, intense local competition from budget carriers and surging fuel prices. The banks have asked for a detailed action plan from Jet Airways on proposals to sell shares, the people said.