Jet Airways climbs 7% on bank-led provisional resolution plan, posts loss in Q3

Jet Airways shares rallied 7.5 percent in morning on Friday after board approval for bank-led provisional resolution plan.

The stock was quoting at Rs 238.40, up Rs 12.60, or 5.58 percent on the BSE, at 09:57 hours IST.

“The bank led provisional resolution plan proposes restructuring under the provisions of the ‘RBI Circular’ in order to meet a funding gap of nearly Rs 8,500 crore which is to be met by an appropriate mix of equity infusion, debt restructuring, sale/ sale and lease back/ refinancing of aircraft, among other things,” the airline company said in its filing.

This resolution plan is expected to be presented for consideration of i) the consortium of Lenders ii) the overseeing committee of the Indian Bankers’ Association, iii) the board of directors of Etihad Airways, and iv) the promoter.

The resolution plan envisages the company receiving the requisite approvals from shareholders at their meeting scheduled to be held on February 21 for conversion of lenders’ debt into appropriate equity shares that would result in the lenders becoming the largest shareholders in the company, and, appointment of lenders’ nominees to the board of directors of the company under the provisions of the RBI circular.

Such allotment/ conversion of Lenders’ debt to equity shares of the company will be made at an aggregate consideration of Re 1, in accordance with the RBI Circular, whereby Lenders can convert debt to equity at Re 1, when the book value per share of a company is negative.

Currently promoter Naresh Goyal held 51 percent equity stake in Jet Airways and the rest is with public.

“Most important news which came post results was on Lenders Resolution Plan got approval from the board. Post this plan lenders will hold 50.1 percent in the company with board seats,” Sameer Kalra, Equity Research Analyst & Founder of Target Investing said.

He is negative on the company for fundamental reasons but for short term this news will provide clarity which was needed, he added.

Jet Airways, on Thursday, posted a loss of Rs 587.8 crore for the quarter ended December 2018 against profit of Rs 165.2 crore in same period last fiscal and loss of Rs 1,297.5 crore in September quarter 2018.

“Despite improvement in RASK (revenue available seat km) which grew by 2.6 percent over Q3FY18 due to seasonal, demand-led strengthening of fares, higher costs due to the price of Brent crude (up 29 percent YoY) and the depreciated Indian Rupee impacted the airline’s overall business performance,” the airline company said.

Revenue during the quarter grew by 1 percent year-on-year to Rs 6,148 crore.

At operating level, EBITDAR (earnings before interest, tax, depreciation, amortisation and rent) fell 54 percent YoY to Rs 458 crore in Q3.

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