The outlook for Jet Airways worsened on Wednesday with the cash-strapped carrier defaulting on loan repayments to banks.
"Payment of interest and principal installment due to the consortium of Indian Banks (led by State Bank of IndiaNSE 0.10 %) on December 31, 2018 has been delayed due to temporary cashflow mismatch," Jet Airways said in a regulatory filing, PTI reported.
The report came hours after Jet Airways CEO Vinay Dube said in an earnings conference call that the airline is on the path of recovery.
"... we remain focused on our airlines business turnaround, which we are happy to report is on track," Dubey had said on Tuesday during the Q2 FY2019 conference call with analysts.
Dubey had, however, drawn attention to the hostile market dynamics that had run the airline down. "Compared to the same quarter last year, the Indian rupee has depreciated by about 10%, and Brent is higher by almost $25 per barrel or 50%. However, instead of witnessing an increase in fares, to recover these cost increases, the industry fares and yields are in fact down. Such a low fare environment is not sustainable for the industry nor good for the consumer in the medium term, and it is imperative that fares rise in the short term," the CEO said.
Jet Airways, once a success story in Indian aviation, has been alternating between attempts to raise cash in the market and find a new buyer.
On Monday, the company's shares saw a spurt after reports said the management was in talks with the State Bank of India (SBI) for a Rs 1,500 crore interim loan. The bump-up in share prices came as the report said that Etihad Airways, which holds 24 percent equity stake in Jet, would offer guarantee for the loan.
India's biggest full service carrier, which posted three consecutive quarters of losses since March, has been looking for a suitor for some time. Etihad itself had emerged as a possible buyer earlier but Chairman Naresh Goyal's unwillingness to cede control had spoiled the merger prospects.
Jet Airways, which Goyal founded in 1993, is reeling under a debt pile of 81.5 billion rupees ($1.2 billion). Bloated costs, surging fuel prices and a weaker rupee are hurting Jet Airways. Peers such as SpiceJet and Indigo had reported impressive profits during the same period.
An erosion in market share in recent years and the inability to expand into other markets also caused Jet's downfall. The rise of Indigo and the launch of Air Asia ate into Jet's formidable market share.