Fund raising can help Jet Airways lower debt, say analysts

Jet Airways has initiated talks to raise $300 million in equity from investors other than Etihad Airways, a report said

Rupee depreciation has increased Jet Airways' finance cost and fund raising can help the airline pare its Rs 12,000 crore debt, say analysts.

About 80 per cent of the airline's debt is dollar denominated and it  spends about 5 per cent of its revenue on interest payments.

A Bloomberg report on Thursday said that Jet Airways has initiated talks to raise $300 million in equity from investors other than Etihad Airways. The fundraising discussions are at a preliminary stage and there is no certainty if they will result in a transaction, the report added.

Jet Airways will not comment on market speculation, an airline spokesperson said. The airline stock was 1.8 per cent up at Rs 374 in intra day trade.

 

An analyst with a domestic brokerage said that fund raising can help the airline reduce debt as it is not adding any aircraft this year. "About 80 per cent of its debt is dollar denominated and rupee depreciation hurts the airline," an analyst said.

The Rs 12,000 crore debt includes over Rs 3, 800 crore aircraft acquisition loan. The airline spent Rs 225 crore in interest payments in Q2 FY 17, an increase of 4.6 per cent over same period last year.

In 2013, Jet Airways had sold a 24 per cent stake to Etihad, becoming the first Indian carrier to receive investment from a foreign airline after the government eased rules. Jet Airways founder Naresh Goyal is still the largest share holder with 51 per cent stake in the airline.