Jet Airways defaults on debt payment, shares tank 6%

Jet Airways defaults on debt payment, shares tank 6%

TROUBLES MULTIPLY: Jet Airways said payments were delayed due to temporary cash flow mismatch

Jet Airways on Tuesday said it had failed to meet its debt payments to banks “due to temporary cash flow mismatch” prompting rating agency ICRA to downgrade the airliner, leading to an over 6% fall in share prices.

In a filing to the Bombay Stock Exchange, Jet Airways said the payment of interest and principal installment due to the consortium of Indian banks on December 31, 2018, has been delayed due to temporary cash flow mismatch.

“The company has engaged with them in relation to the same,” the airliner said in a statement to the stock market.

As of September 2018, the company had a debt of Rs 8,052 crore. The airliner is going through a financially turbulent period which has led to delay in payment of salaries and repayment of dues.

After reporting a loss of Rs 17.8 crore for July-September, it said it would cut flights on less profitable routes as part of a cost-cutting exercise.

The Jet Airways scrip opened at Rs 274 on the Bombay Stock Exchange and closed at Rs 263.75, a fall of 6.16%.

“There have been delays in implementation of the proposed liquidity initiatives by the management, which have aggravated its liquidity. The company has already been delaying its employee salary payments and lease rental payments to aircraft lessors,” the ICRA said in a note.

'ICRA Limited' has revised the long term rating to ICRA-D from ICRA-C, the rating agency informed the BSE. It added that the short term rating has been revised to ICRA-D from ICRA-A4.

The agency said the rating downgrade had considered the delay in debt payments by the airliner.

According to reports, the Tata Group had reviewed Jet's accounts to potentially buy a stake. Tata already operates Vistara in partnership with Singapore Airlines and AirAsia India with AirAsia Group.