Cash-crunched Jet Airways pledged its Fixed Deposits to the State Bank of India (SBI) to borrow ₹225 Crore loan. The various FD’s of airline has a total value of about ₹1500 Crore and par the agreement Jet Airways can borrow more capital on the pledged deposits.
Budget carrier Jet Airways which was once a premiere airline of India has been struggling with rising debt and cash crunch. This has forced the airline to take the last resort of taking loans against pledged FD’s.
Since 8 February, at least 23 planes were grounded due to non payment of employees and remaining dues to the lessors. Naresh Goyal led airline is struggling to make ends meet, and is unable to pay rent to lessors and payment to staff due to rising fuel prices, stiff competition by rivals like Indigo and Vistara in the air space.
As per the people close to the deal, the borrowed capital will be infused in its core business like paying rent, clearing dues and for giving salaries to employees.
Jet Airways has been incurring loss of over 1000 Crore in the past three consecutive quarters and as per experts, will incur more loss in the current quarter ending March 31. The airline has a negative net worth of ₹10,370.24 crore with a debt of about ₹9,610.16 crore which makes it very difficult for it to borrow capital from the lender. Such an adverse scenario has forced the airline to pledge Fixed Deposits.
Cash crunched-Budget Carrier Jet Airways, in its extra general meeting (EGM) on 21 February gave approval to the resolution plan for revival of the debt ridden airlines. About 98% of the stakeholder gave their approval nod to plan, which includes fresh infusion of funds, conversion of debt into equity and plans for rights issue.
Jet Airways has been exploring all its options of raising fund so that it can meet its capital requirement and last month an SBI led consortium agreed for a bailout plan too and now this pledging of FD seems to be its last resort.