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Cash-strapped Jet Airways Ltd said late Tuesday it defaulted on debt payment to a consortium of Indian banks, prompting ratings agency ICRA to downgrade the carrier and sending its shares sharply lower.
The payment of interest and principal instalment was delayed “due to temporary cash flow mismatch” and the company is in talks with the consortium. The deadline for the payment was December 31, 2018, Jet said in a statement .
ICRA cut Jet's long- and short-term ratings on Wednesday, citing the payment delays.
Timely implementation of liquidity initiatives, including equity infusion and a stake sale in the airline's loyalty programme Jet Privilege, will be critical to the company's credit profile, ICRA said.
The 25-year-old airline is facing financial difficulties and owes money to staff, lessors and vendors. Intense pricing competition, a weak rupee and rising fuel costs weighed on Indian airlines in 2018.
Jet and its second-largest shareholder Etihad Airways are in talks with bankers on a rescue deal that may involve the Abu Dhabi-based airline increasing its stake from 24 per cent. The airline's shares declined as much as 5.6 per cent in their sharpest intraday drop in over three weeks and were last down 5.3 percent at 265.80 rupees, as of 0835 GMT.
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