NEW DELHI: Shares of cash-strapped Jet Airways fell more than 6 per cent on Monday after rating agency ICRA downgraded the airline’s long-term rating from ‘B’ to ‘C’, the second such downgrade by it since October.
On BSE, the stock fell 6.77 per cent to settle at Rs 257.5, while on NSE it tumbled 7.15 per cent to close at Rs 256.5. Instruments with ‘C’ rating are considered to have a very high risk of default regarding timely servicing of financial obligations, as per the agency.
In its report, ICRA mentioned that the rating was downgraded considering delays in implementation of proposed liquidity initiatives by the management, further aggravating its liquidity, as reflected in the delays in employee salary payments and lease rental payments to aircraft lessors. The airline is reportedly in talks with multiple people to raise funds, but so far no one has confirmed buying a stake in the airline. While it is reported that a possible deal with Tata Sons went sour, its existing partner Etihad is still in the loop to raise its stake in Jet.
NRI business tycoon Yusuff Ali, the promoter of the multi-billion dollar Lulu Group, too confirmed that he had no plan to buy a stake in Jet now. The private carrier on Monday also announced the signing of an agreement with Saudi budget airline flynas to operate code-share flights in each other’s territories.
Jet will place its marketing code ‘9W’ on flynas flights between the cities of Dammam, Jeddah and Riyadh, thus providing its guests travelling from India the ability to travel to Saudi Arabia via one point and depart from another.
In turn, flynas will be able to offer its guests access in to India by placing its marketing code ‘XY’ on Jet Airways’ international flights connecting Jeddah to Mumbai, Riyadh to Mumbai and Delhi as well as Dammam to Mumbai and Delhi. Code-sharing allows an airline to book its passengers on its partner carriers and provide seamless travel to destinations where it has no presence.
Deal with flynas
Jet Airways and Saudi budget airline flynas will operate code-share flights in each other’s territories as part of a deal.