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.

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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

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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

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Jet Airways dropped 300 flights in Feb and Mar as the aircraft changes its system

Jet Airways has dropped 300 more than flights in Feb and Mar as the aircraft changes its system

Around 60 flights planned for February 28 have been dropped and its mentioned that this is plan of strategy to save around Rs.2,000 crore of expenses.

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Dealing with its arrangement to spare expenses and justify tasks, Jet Airways has dropped more than 300 flights in February and March as the aircraft changes its system. It also mentioned that this is plan of strategy to save around Rs.2,000 crore of expenses.

Around 60 flights planned for February 28 have been dropped. While the Jet Airways site says that the flights have been dropped because of ‘operational reasons’, an official included that these are arranged ones and both the controller DGCA and clients have been educated.

“A large number of the dropped flights have been re-directed over center points, and many can in any case return to the framework,” said a senior carrier official. The scratch-offs, the individual emphasized, shouldn’t be connected with the establishing of the carrier’s airplane.

Furthermore, about 100 flights were additionally affected by the runway conclusion in Mumbai, and part conclusion of the Bengaluru airplane terminal because of the Aero India 2019 show. The runway in Mumbai is shut for four hours, three days seven days, till the finish of March.

The rebuilding happens even as Jet Airways advertiser Naresh Goyal and Eithad Airways CEO Tony Douglas met best authorities of State Bank of India on February 27. Etihad claims 24 percent stake in Jet Airways. SBI is the lead loan specialist to the carrier.

Industry administrators said the gathering expected to put completing addresses the goals plan that was cleared by the Jet Airways’ board, and furthermore got approval of its investors, prior in February.

The Indian aircraft, which has over Rs.8,000 crore in the red, is searching for critical liquidity implantation to pay its pilots, specialists and make installments to its lessors.

Modification in Network:

Jet Airways had in 2018 announced plans to save up to Rs.2,000 crore in costs over two years. This followed consecutive quarters of huge losses.

Integral to this plan was to rationalise its operations, including closing stations, shutting down routes and reworking network around its two hubs: Mumbai and Delhi.

The network modification has led to longer duration cancellation of flights. For instance, the airline will not have a direct flight between Thiruvananthapuram and Bengaluru till October 26. Instead, fliers can take stopover flights from Mumbai, for both destinations.

Some of the stations, including Thiruvananthapuram, have also been closed down. And in others, while the centres have not been shut, the crew has been shifted to other stations.

The airline has also stopped direct flights to the Middle East from Kerala, and has instead routed them via Mumbai.

The airline also shut services to some of the North-East destinations, including Silchar, Imphal and Jorhat. But it continues to fly to Guwahati.

The tweaking of the network will continue, said industry executives, and customers have been advised to check for updates.

Source: MoneyControl

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IndiGo plans to extend services to China, Vietnam and Myanmar, among other countries

IndiGo plans services to China, Vietnam, Myanmar and Saudi Arabia, other countries

In a communication to employees on Monday, IndiGo’s CEO Ronojoy Dutta said the airline would be looking at ambitious expansion in the international market and utilise around 50 percent of its new capacity on that market.

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Budget carrier IndiGo will be looking at starting services to China, Vietnam, Myanmar and Saudi Arabia, among other countries, as the airline embarks on expanding its international network, according to a communication.

In a communication to employees on Monday, IndiGo’s CEO Ronojoy Dutta said the airline would be looking at ambitious expansion in the international market and utilise around 50 per cent of its new capacity on that market.

IndiGo is the country’s largest domestic carrier with a market share of 42.5 percent in January.

The carrier, which has more than 200 planes, operates over 1,300 daily flights.

“In the international market, we will be looking at an ambitious expansion with approximately 50 per cent of our new capacity directed at international markets.

“We will be looking to add new service to countries such as China, Vietnam, Myanmar, Turkey, Saudi Arabia, CIS (Commonwealth of Independent States) countries and also add frequencies in existing routes,” Dutta said.

According to him, the airline would continue to build air-infrastructure to smaller cities.

Source: PTI

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Adani Group has won bids to operate 5 airports of AAI

Adani Group has won bids to operate 5 airports of AAI (Airports Authority of India)

Sources said the Adani Group, which has bid for all six airports, have won to upgrade and operate five of them of for a period of 50 years

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The Adani group has won bids to upgrade and operate 5 out of 6 airports that the Airports Authority of India (AAI) had put out for bids.

Sources said the Adani Group, which had bid for all six airports, has won to upgrade and operate five of them of for a period of 50 years.

The airports that the group has won are Lucknow, Jaipur, Ahmedabad, Mangalore & Trivandrum.

Bids for sixth airport – Guwahati- have not been opened yet, sources added.

These airport projects will mark the entry of the Adani Group in aviation. The group is trying to enter airport business and has been in talks with GVK for a possible takeover of its stake in Mumbai airport.

Source: ET Bureau

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