Jet Airways share drops by 5%; SBI shrugs off NCLT news on debt recovery

This week’s trading session, did not start with a good news for private carrier Jet Airways. The airline’s share price have dropped by nearly 5% after touching an intraday low of Rs 225 per piece on Sensex. However, at around 1300 hours, the Jet Airways was trading at Rs 231.40 per piece down by Rs 5.30 or 2.24%. Reason behind tumble in this airline’s share price is due to various buzz involving SBI moving to NCLT bench for debt recovery from this airline, while another report highlights that pilots are warning for non-cooperation over new resolution plan. Also in weekend, the airline has announced to ground two more jets, while a new share capital structure has been proposed. These together had an impact on this airline’s share price. 

Firstly, BSE has sought clarification from Jet Airways, in regards to report stating that, Jet Airways pilots warn non-cooperation over pay dues and SBI mulling insolvency route via NCLT to recover Jet Airways loan. 

While Jet Airways is yet to give its clarification, however, largest lender SBI who also leads the consortium of banks against the airline’s debt, has shrugged off the NCLT move news. 

It was a PTI report, quoting SBI officials, suggested that State Bank of India (SBI) is looking at approaching the National Company Law Tribunal (NCLT) to recover its loans from private carrier Jet Airways. 

SBI spokesperson said to Zee Business Online that, “Reports have been appearing in the media about decision taken by SBI to refer Jet Airways to NCLT. These are totally speculative and SBI would like to state that no such decision has been taken.”

While a LiveMint report mentions that,  in a communication to its members on 22 February, Jet’s pilots union, National Aviator’s Guild (NAG), said the management is expected to give an update on salary payment on 25 February.

Reportedly, it was written to Jet Airways that, “25% of November salary will be paid on 26 February. Discussions for further payout to continue. Expect an update on 25 February. In case of unsatisfactory outcome, non-cooperation will begin from 1March.”

A clarification in this matter is yet awaited from Jet Airways. 

#ZBizImpact | एक बार फिर #ZeeBusiness की ख़बर पर लगी मुहर, अंडर-कंस्ट्रक्शन प्राॅपर्टी पर #GST 12% से घटकर 5% हुआ।@AnilSinghviZEE @SwatiKJain pic.twitter.com/AMy14msU5H

— Zee Business (@ZeeBusiness) February 25, 2019

Meanwhile, in the weekend Jet Airways has been very busy. Laden with debt, the airline announced that,  an additional two aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements. Jet said, “As mentioned earlier, the Company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken by the Company to improve its liquidity. Aircraft lessors have been supportive of the Company's efforts in this regard.”

A new plan was accepted by Jet Airways board presented by a Bank led Provisional Resolution Plan (BLPRP). 

The BLPRP proposed to convert debt into equity. They will convert Jet Airways debt into  11,40,00,000 shares of Rs. 10/- each by allotment of such number of equity shares to the Lenders that would result in the Lenders becoming the largest shareholders in the Company.  The cost of converting debt to equity is set at a consideration price of Re 1. While lenders will nominate their own members in Jet Airways board of directors. Also, sanction of appropriate interim credit facilities by domestic lenders on terms to be agreed.