India’s Jet Airways raised Rs.2,050 crore ($293 million) loan from PNB

India’s Jet Airways raised Rs.2,050 crore ($293 million) loan from PNB

Jet Airways secured foreign currency term loan worth Rs.1,100 crore and a non-fund based credit facility of Rs.950 crore from Punjab National Bank.

TFM News

Jet Airways has secured capital worth Rs.2,050 crore from Punjab National Bank (PNB) in a bid to provide temporary support to the carrier. The airline raised foreign currency term loan worth Rs.1,100 crore and a non-fund based credit facility of Rs.950 crore from PNB, Mint reported.

This credit has been raised in two trenches through separate contracts with PNB. Under one contract, the airline received credit of Rs.1,050 crore, including a term loan worth Rs.350 crore and a non-fund based facility of Rs.700 crore, the report said. With the second contract came credit worth Rs.1,000 crore, including a term loan of Rs.750 crore and a non-fund based facility of Rs.50 crore.

It is unclear how the carrier will use this credit. While assumption is that the funds will be used for its working capital needs, sources told the newspaper that the airline wants to use the money to clear dues to aircraft lessors and pay staff salaries.

This capital infusion may prop up Jet Airways’ credit rating and help resume flights that have been cancelled ever since at least 49 of its planes were grounded in February.

“The loan has been raised in dollars at a stronger rupee as compared to the value of the rupee now. So, there is a cost arbitrage, which could help the company repay larger rupee loans,” a source cited earlier said.

The term loans have a five-year repayment tenure, but their interest rates are varied. The Rs.750 crore loan has been extended at a rate of 12-month Libor plus five percent and a yearly reset. For the Rs.300 crore term loan, it is six-month Libor plus 3.5 percent and a half-yearly reset.

The airline can sell down Rs.250 crore of the term loans to investors according to the agreement. “The non-fund based facility can be later converted to current account credit facility and be used to fund operations or meet other dues,” the source added.

To avail of the loan, Jet Airways had to create a trust and retention account (TRA) through a tripartite agreement with PNB and ICICI Merchant Services. This mechanism is used to protect banks and lenders against defaults by insulating the project’s cash flows.

Under this pact, the TRA agent has to make all payments to lenders directly, without the borrower’s intervention. This includes managing the project’s operation and maintenance expenses, maintaining a debt servicing reserve and a separate cash reserve for operational spending.

Jet Airways had a debt of Rs.9,600 crore as of December 31. It has incurred a total loss of Rs.3,200 crore in the nine months through December, with a negative net worth of Rs.10,370 crore.

Source: MoneyControl

– TFM Watch

⇓ Subscribe[jetpack_subscription_form show_only_email_and_button=”true” custom_background_button_color=”#362e77″ custom_text_button_color=”#ffffff” submit_button_text=”Subscribe” submit_button_classes=”wp-block-button__link has-text-color has-white-color has-background has-dark-blue-background-button-color” show_subscribers_total=”false” ]

Read more Business NewsMarket News

Qatar Airways to announce another annual loss this year

Qatar Airways to announce another annual loss this year, CEO stated

The state-owned airline has quickly expanded to new destinations since it lost access to 18 Middle East cities in 2017 due to a diplomatic breach between Qatar and some other Arab states.

By ReutersTFM Watch

(Reuters): Qatar Airways will announce a second consecutive yearly loss this year, its chief executive stated on Wednesday, accusing higher fuel costs and unfavourable currency exchange rates.

The airline has rapidly expanded to new destinations since it lost access to 18 Middle East cities in 2017 due to a diplomatic breach between Qatar and some other Arab states.

“We reported a loss last year and we will announce another loss this year but it doesn’t mean that Qatar Airways is not going to expand or invest,” Akbar al-Baker said to reporters at the ITB travel fair in Berlin.

“We have a very strong balance sheet, regardless if we are temporarily making losses because of our additional operating costs, and the increasing fuel price and the loss of foreign exchange.”

Qatar Airways lost access to cities in Saudi Arabia, the United Arab Emirates, Egypt and Bahrain in June 2017, when these four countries cut ties with Qatar after condemning it of supporting terrorism. Qatar denies the charges.

The airline has also been barred from their skies, meaning its flights to the west and south of the Gulf have to fly longer routes around the four countries, growing its fuel costs.

The Airways reported a $69 million loss last year, which it accusing on the higher operating costs caused by the diplomatic disagreements.

In 2017, Baker was stated that the airline’s owners might have to put in additional capital if the issues continued over the long term.

Still, on Wednesday he said he did not expect to seek a capital injection in the predictable future.

Qatar Airways declared seven new destinations on Wednesday, including Malta and Somalia’s capital Mogadishu and said it would announce a further seven in the second half of current year.

It will continue to operate its fleet of 10 Airbus A380 aircraft for the “predictable future,” Baker said. Airbus announced last month it would end A380 production in 2021.

Source: Reuters

– TFM Watch

⇓ Subscribe[jetpack_subscription_form show_only_email_and_button=”true” custom_background_button_color=”#362e77″ custom_text_button_color=”#ffffff” submit_button_text=”Subscribe” submit_button_classes=”wp-block-button__link has-text-color has-white-color has-background has-dark-blue-background-button-color” show_subscribers_total=”false” ]

Read more Business NewsMarket News

SBI and PNB agreed to provide Rs.500 crore in emergency to Jet Airways

SBI and PNB may pump in Rs.500 crore in Jet Airways if other lenders agree

The fund would allow the cash-strapped Jet Airways to continue operations until the lenders agree to a restructuring plan for the airline, which has a debt of over Rs.8,000 crore.

Jet-Airways-620x372.jpg

State Bank of India (SBI) and Punjab National Bank (PNB) have agreed to provide Rs.500 crore in emergency funding to Jet Airways on a condition that other lenders in the consortium do not object, The Economic Times reported..

The fund would allow the cash-strapped Jet Airways to continue operations until the lenders agree to a restructuring plan for the airline, which has a debt of over Rs.8,000 crore.

The details of the loan, however, are yet to be worked out.

“Only SBI and PNB have agreed to step in and provide the loans,” a source told the paper, adding that none of the other lenders are willing to lend more.

Fresh debt would be given the first preference in the event of a loan recovery, the source told the newspaper, adding: “Since it will be treated on a higher pedestal on the debt waterfall, it needs an okay from other lenders.”

On February 14, Jet Airways’ board approved a rescue deal that would make its lenders its largest shareholders and fix a near $1.12 billion funding gap.

Under the proposed provisional resolution plan by Jet Airways top lender SBI bank may convert a part of the debt into 114 million shares by paying a token Re 1 apiece, based on Reserve Bank of India (RBI) restructuring guidelines. The move would give lenders majority shareholding (50.1%) in the company.

This plan, however, is yet to get the approval of other lenders. Its approval may get delayed due to the crucial emergency funding proposal.

The airline had recently posted its fourth consecutive quarter of losses in the October-December period. It posted a loss of Rs.587.8 crore in Q3 FY19 against a profit of Rs.165.2 crore in the same period last fiscal and loss of Rs.1,297.5 crore in the July-September quarter of 2018.

⇓ Subscribe[jetpack_subscription_form show_only_email_and_button=”true” custom_background_button_color=”#362e77″ custom_text_button_color=”#ffffff” submit_button_text=”Subscribe” submit_button_classes=”wp-block-button__link has-text-color has-white-color has-background has-dark-blue-background-button-color” show_subscribers_total=”false” ]

Read more Business News