Decision on funding to Jet Airways will be on collective basis, says PNB
The airline has already defaulted on repayments on external commercial borrowings due to the paucity of funds.
Mumbai: State-run Punjab National Bank (PNB) on Wednesday said any decision to provide emergency funds to cash-strapped Jet Airways will be taken collectively by the lenders and not on a standalone basis. The assertion comes in the backdrop of media reports that PNB had approved Rs 2,050 crore of emergency funding to Jet Airways, for which lenders are considering a resolution plan under Project Sashakt.
In a filing to exchanges, Jet Airways had earlier clarified it has not received any fresh loan from PNB. "No, we are going (on decision to lend further to Jet Airways) collectively. The resolution will come with the participation of the stakeholders and we are working on it," the bank's managing director and CEO, Sunil Mehta, told reporters when asked whether the lender was considering fresh funds to the loss-making Carrier on a standalone basis. Mehta was speaking at the sidelines of the Ficci-IBA event here Thursday.
Any emergency funding to Jet Airways will be part of the resolution package, he said. Mehta said the resolution plan for the airline is under deliberation at the joint lender forum and the lead banker, State Bank of India, is in discussion with various stake holders. Bank of India's managing director and CEO Dinabandhu Mohapatra, who was also present at the event, said bankers are supporting the resolution plan for the airline. "Unless you support, there will be destruction of value. We have to protect the value and the airline," Mohapatra told reporters.
Jet Airways has a debt of over Rs 8,000 crore and needs to make repayments of up to Rs 1,700 crore by the end of March. The airline, has however, already defaulted on repayments on external commercial borrowings due to the paucity of funds. The acute liquidity crunch has forced it to ground aircraft, shut down stations and delay salary payments to its pilots and engineers along with other senior staff.
It has been looking at various ways to raise funds. On March 8, Jet Airways chairman Naresh Goyal wrote to Etihad Airways Group CEO Tony Douglas seeking an urgent funding of Rs 750 crore under an MoU signed between various stakeholders. Etihad Board, however, has reportedly not taken a final decision on the pact.
Last month, shareholders of Jet Airways cleared approved conversion of loan into shares and other proposals. On 14 February, Jet Airways' board approved a bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become the largest shareholders in the airline. Following approval from the shareholders, part of debt would be converted into 11.4 crore shares at a consideration of Re 1 apiece as per the RBI norms.