It has been no secret that Jet Airways has been struggling over the past half a year. Simple Flying has posted many articles on the topic each time new news came to light. Now it looks as though it could finally be the end for Jet Airways unless they can raise $250-300 million within the next few days. This is due to the airline defaulting on loan repayments in India due on the 31st December. This comes despite the airline receiving financial assistance from Boeing last year, and asking creditors for a moratorium on loans. This is in addition to a lump sum of cash provided by Etihad.
Months Of Trouble
Things looked okay for the airline back in July, and clearly, Boeing thought so too. At the Farnborough Airshow in 2018 Jet Airways announced a deal to purchase 75 B737MAX aircraft. This brought the total number of B737MAX aircraft expected to be received by the airline to 225.
The deal was worth $8.8bn. Now, clearly, Boeing wouldn’t have agreed to the deal if they didn’t believe that Jet Airways was capable of maintaining their side. As such, in order to help ease Jet Airways when they were in financial difficulty, Boeing gave the airline aid. This came in the form of returning some progress payments in addition to some deposits.
Decreased Financial Rating
Following the missed loan payments, Simple Flying has learned that the credit assessor ICRA has downgraded the company’s credit rating. This now stands at D which means that the borrower has defaulted, or is expected to default imminently. According to Bloomberg, the carrier said that the payment was “delayed due to temporary cashflow mismatch”. As such, the airline has now defaulted on its payments. This means that Jet Airways has been forced to ask others for even more cash. The airline appears to be in a slippery slope of borrowing cash to pay back borrowed cash.
While Jet Airways didn’t say the amount due to creditors, Simple Flying has learned that the airline has requested a short-term loan from the State Bank of India. This loan application for 15 billion rupees (US$216 million) is currently being audited forensically for possible approval. Jet Airways has also reportedly asked Etihad Airways, its foreign equity partner, for even more capital to “avoid possible defaults”.
While Bloomberg reports that Jet Airways declined to comment on the matter on Wednesday, Simple Flying has contacted a representative of the airline for comment.
Do you think the airline will stay afloat? Let us know in the comments down below!