The airline, one of the earliest private players in India’s commercial sector, is taking up cost-cutting steps to ensure that it gets out of its financial woes
Beleaguered airline Jet Airways has reportedly sought a moratorium on the loans it owes to banks and fresh capital to deal with a cash shortage.
According to a report on Bloomberg, Jet Airways’ short-term debt stands at 46 percent of its total debt, the highest among its Asian competitors. Jet Airways hopes to cut its costs by Rs 2000 crore in the next two years, the report said.
The airline, one of the earliest private players in India’s commercial sector, is taking up cost-cutting steps to ensure that it gets out of its financial woes.
Jet Airways is considering letting go of non-core staff, the trimming of salaries and capital infusion, the report said quoting an official. Earlier reports say that the airline has asked personnel to take pay cuts and have grounded close to a dozen of its aircraft.
The airline is also considering a sale of its stake in its frequent-flier program, JetPrivelege. It owns 49.9 percent of JetPrivilege, with the rest held by UAE-based Etihad Airways. According to the report, Blackstone Group LP and TPG were in talks to secure the stake in JetPrivelge though no deal has been finalised yet.
The banks have asked for a detailed proposal from the airline for the sale of its shares, the report said.
The cut-throat competition, rising exchange rates, the discounting of tickets to its lowest denominator and the price of aviation turbine fuel (ATF) in India being one of the highest in the world are key factors that eat into the profits of airlines in India, despite a rise in the number air passengers.
The report mentions that following a lending debacle with Kingfisher Airlines, banks have shrugged off Jet Airways’ previous grants for more capital.
Shares of the airline have fallen by 75 percent in value over the last year, its market cap is currently at $325 million.The airline's net debt stood at Rs 7,360 crore as of June 30, 2018, of which 65 percent was denominated in dollars, according to a statement by Chief Financial Officer Amit Agarwal in August.