Indian airline Jet Airways, which is struggling to keep its fleet running and has fallen behind on salary payments, is now looking to secure a short-term loan.
The full-service carrier is in talks with the country’s largest lender State Bank of India (SBI) to raise 15 billion rupees (US$214.9 million) to meet its working capital requirements and fulfill some payment obligations. Jet’s strategic partner, Etihad Airways of Abu Dhabi, which holds a 24% stake in the airline, is likely to serve as a guarantor for the loan, Press Trust of India reports.
Interestingly SBI, which is the lead lender of the airline, had a fortnight ago ordered Ernst & Young to conduct a forensic audit of the airline’s books.
Jet Airways has posted three consecutive quarterly losses of more than 10 billion rupees since March 2018, and as of September 30 had 80.52 billion rupees of debt on its books. It also has a backlog of more than two months in unpaid salaries to its senior staff, including pilots and engineers.
The airline is also negotiating with overseas lenders to raise $350 million with Etihad again acting as guarantor.
The airline’s founder, Naresh Goyal, is looking to infuse capital in such a way that he does not have to lose control of Jet Airways, which he set up 25 years ago.
Earlier, the salt-to-software conglomerate Tata Sons had expressed a desire to acquire the airline, but wanted Goyal to relinquish his controlling stake, which was not acceptable to the airline’s founder.