In an attempt to rescue debt-ridden India’s air carrier, Jet Airways, Abu Dubai-based Etihad Airways is in discussions with the airline and its lenders to formulate a rescue plan, according to the media reports on Wednesday (5).
The officials from Etihad, a 24 per cent shareholder in the Indian carrier have met some of the bankers in Mumbai recently to discuss the steps to address the cash crunch being faced by the company and to prepare a road-map for the future of the airline, Reuters quoted two sources as saying.
A meeting between, Etihad, Jet Airways and, Indian lender SBI, has been aimed at resolving operational cash flow hurdles. The two companies need to know more about how much more debt they can get.
No deal has been formulated yet. However, Etihad is considering new funds in the airline if it can agree on the structure, the sources added.
The new business plan handed over to the lenders includes information on the airline’s network and fleet expansion target for the upcoming three to five years and also revenue and cost projections.
According to an estimation, by mid-January next year the jet may witness some cash inflow. The company doesn’t have the liquidity to repay its dues, however, it pays statutory dues such as taxes.
The 25-year-old Naresh Goyal-led Jet Airways has outstanding dues of around $400million which it mainly owes to lessors and vendors. The company has also delayed salary payments to its staff members and cutting flights on non-profitable routes in an attempt to save its funds.
The airline is also working to reduce airport and support staff with fewer flights on some routes. The company has also delayed the delivery of at least two aircraft to next year from November-December.
Etihad had come to support Jet Airways when it purchased a 24 per cent share in the carrier in 2013.
Meanwhile, amid tighter lending rules and regulations in India, the lenders seem to be more reluctant to lend more to the struggling airline. Jet Airways had loans of about Rs 80.52bn as on September 2018.
Jet Airways has introduced 65 additional frequencies on its international and domestic routes starting December 2018, thus, further strengthening its network over its hubs of Mumbai and Delhi.
The airline has added a daily direct frequency from Pune to Singapore making it the first airline to do so. Owing to the going traffic to Singapore for leisure, business, medical and growing student traffic, Jet Airways has also added a third daily frequency from both its hubs, Mumbai and Delhi to Singapore.
On the international network from Delhi, Jet Airways has added an additional third service between Delhi and Bangkok and a fourth frequency on the Delhi – Kathmandu route to meet the growing demand from travellers.