Are Jet Airways’ desperate lenders throwing good money after bad?
“It takes nerves of steel to stay neurotic,” Herb Kelleher, co-founder of Southwest Airlines, once famously said. Lenders to the beleaguered airline, Jet Airways (India) Ltd, have shown they have nerves of steel with regards to the troubled investment, but the moot question is if their continued support of the airline borders on neurosis.
The lenders, led by State Bank of India (SBI), said on Monday that they will pump in another ₹1,500 crore into Jet Airways, to get the airline in shape for an eventual sale. At the end of December, Jet Airways had an unmanageable net debt of ₹7,299 crore.
With recovery becoming increasingly challenging, the lenders had converted some loans into equity, giving them a 51% stake in the company. Unless a buyer emerges for the airline, the lenders will just be saddled with more debt.
