Cash-strapped Jet Airways is seeking a loan moratorium from the banks in a bid to tide over the liquidity problems, reports said on Tuesday.
The embattled airline, where salary payments were delayed on many occasions, is also seeking a fresh infusion of funds, Business standard reported, citing sources.
The airline, India's biggest full-service carrier, has grounded planes, cut pilots' pay and deferred salary payments in a bid to preserve cash. The latest report also says the carries is planning to send more staff home. The incoming job cuts will be in the non-core areas, the paper said citing sources.
Jet Airways hasn't made a profit in nine of the last 11 years. The launch of Jet Airways in 1993 had marked the opening up of the rusty Indian economy. The carrier now has a debt load of 81.5 billion rupees ($1.2 billion).
In the year ended 31 March, the airline reported a loss of Rs 636.45 crore. Most of Jet's debts are dollar-denominated and hence a continued fall in the rupee has worsened the debt problem.
Jet Airways, in which Abu Dhabi's Etihad Airways has a 24 percent share, has been looking for suitors ever since it started facing cash flow issues.
It was reported last week that the Tata Group has held talks to buy a substantial share in the ailing carrier. Jet however, denied that it is in talks with Tata.
It was reported earlier that Etihad was interested in taking a controlling stake in Jet Airways, but Naresh Goyal, who holds 51 percent, had declined the offer. It remains to be seen if Etihad will raise its stake in the current context.
Jet Airways had tried to raise loans in the markets but banks have insisted on a turnaround commitment. Loans are unlikely to be approved without significant cost reduction.
Apart from bloated costs, surging fuel prices and a weaker rupee are hurting Jet Airways. The other reasons cited by senior management in parleys with the staff are an erosion in market share in recent years and the inability to expand into other markets. The rise of Indigo and the launch of Air Asia had also eaten into Jet's formidable market share.
BS said that a Jet Airways representative did not comment on the news that the airline was seeking a loan moratorium. Meanwhile Jet Airways shares rose as much as 4 percent on Tuesday on hopes that a positive move from the banks would shore up the company's finances.