Jet Airways Needs an Overhaul, Not Just Debt Restructuring

Lenders have proposed a turnaround plan for Jet Airways (India) Ltd, news reports suggest. According to a Mint report, local lenders to the troubled airline have proposed a $900 million resolution plan, comprising fresh equity infusion and restructuring of $450 million of its loans, Livemint.com reported. Business Standard reported that State Bank of India Ltd could possibly consider converting its debt into equity. Sure, conversion of debt to equity will bring some relief on interest costs, although it remains to be seen how much equity dilution that may entail. While interest costs stood at a substantial ₹480 crore for the half-year ended September, the airline’s pre-tax loss came in at ₹2,620 crore. Clearly, these measures are no panacea and appear more like a temporary fix. Jet Airways requires a major overhaul. It needs a deep-pocketed strategic investor to turn it around. The resolution plan will only make sense if it helps dress up the airline for an eventual sale. Read more

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