File photo: A Jet Airways plane is parked as other moves to runway at the Chhatrapati Shivaji International airport in Mumbai. Image Credit: Reuters

Mumbai: The board of Jet Airways Ltd has approved a plan by its lenders to resolve a near Rs85 billion (Dh4.41 billion, $1.19 billion) funding gap, which will make them the largest shareholders of India’s biggest full-service carrier, Jet said on Thursday.

Jet, saddled with over $1 billion in debt, had a rough 2018 as competition intensified in the Indian airline market, the rupee depreciated and high oil prices squeezed margins.

The rescue deal by Jet’s lenders, led by State Bank of India, includes funding through a mix of equity infusion, debt restructuring and sale or leaseback of aircraft.

Jet will seek approval from its shareholders at a meeting on February 21 for conversion of its debt into 114 million shares. It currently has 113.6 million shares on issue.

The plan gives lenders the ability to appoint nominees to the airline’s board.

Jet said that after its approval the plan will be presented back to the lenders, as well as to an overseeing committee of the Indian Bankers’ Association, the board of shareholder Etihad Airways and Jet’s founder and chairman Naresh Goyal.

Abu Dhabi’s Etihad, which owns 24 per cent of Jet, bailed out the Indian airline in 2013, paying $600 million for a 24 per cent stake in Jet, three take-off and landing slots in London Heathrow and a majority share in Jet’s frequent flyer programme.

Losses mount

Jet Airways on Thursday reported Rs5.87 billion (Dh304.5 million) stand-alone net loss for the third quarter ended December 31, 2018. It had reported a net profit of Rs1.65 billion during the year-ago period.

“Despite improvement in RASK (revenue per available seat kilometre), which grew 2.6 per cent over the third quarter of FY18 due to seasonal, demand-led strengthening of fares, higher costs because of the price of Brent crude (up 29 per cent year-on-year) and the depreciated Indian rupee impacted the airline’s overall business performance,” the company said in a statement.

“These factors ensured that the sequential reduction in non-fuel CASK (cost per available seat kilometre) over the last few quarters could not be sustained. For the third quarter of FY19, Jet Airways’ non-fuel CASK increased by 13.7 per cent on a year-on-year basis to Rs3.43 crore. Excluding forex impact, non-fuel CASK increased 7.5 per cent,” it said.

On a consolidated basis, the airline’s net loss stood at Rs7.32 billion for the third quarter of FY19, against a net profit of Rs186 crore in the year-ago quarter.