ICRA downgrades Jet’s short, long term credit ratings

Views: 34

New Delhi, Sep 4 (IANS) Financially troubled Jet Airways has flown into yet another air pocket with rating agency ICRA downgrading the company’s short and long term credit facilities.

The downgraded comes at a time when India’s aviation sector faces the headwinds of rising fuel prices and a weak rupee amidst heavy competition and low air fares that have already pushed many domestic airlines deep into the red, including Jet Airways.

Accordingly, the airline’s long term rating assigned to “Long term Loans” and “Non-Convertible Debentures” was revised to BB (negative outlook) from BB+ (negative outlook).

Besides, airline’s short term rating has also been downgraded to A4 from the previous A4+.

“The ratings downgrade considers the continued deterioration in the operating and financial performance of the company because of its inability to pass on the increase in jet fuel prices to the customers,” ICRA said in its report on Monday.

ALSO READ:   National Frequency Allocation Plan 2018 to be announced at India Mobile Congress

“The company has large debt repayments due over FY2019 (Rs 3,120.3 crore), FY2020 (Rs 2,444.5 crore) and FY2021 (Rs 2,167.9 crore).”

Further, ICRA said that the credit profile of Jet Airways will continue to remain stretched in the medium term until the domestic airlines industry is able to pass on the increase in jet fuel prices to the customers through an increase in fares or the company is able to raise adequate funds to ease the liquidity pressures.

The downward revision comes after Jet Airways Group on August 27 reported a net loss of Rs 1,326 crore for the first quarter of 2018-19 from a net profit of Rs 58 crore earned during the corresponding period of the previous fiscal.

On a standalone basis, the airline’s net loss stood at Rs 1,323 crore from a net profit of Rs 53.5 crore reported for the corresponding quarter of the previous fiscal.

ALSO READ:   Mumbai Congress demands White Paper on IL&FS mess

According to the airline, an increase in Brent fuel price by more than 36 per cent, along with a weak rupee and a mismatch between high fuel prices and low fares primarily undermined its financial performance during the quarter under review.

Jet Airways also plans to go in for a cost reduction programme to reduce expenses totalling Rs 2,000 crore over two years.

In addition, the company has decided for a “balance sheet restructuring” which entails capital infusion and debt reduction.

–IANS

rv-rrb/vm

Comments: 0

Your email address will not be published. Required fields are marked with *