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Jet Airways seeks shareholder nod for debt-to-equity swap

bengaluru - Jet and shareholder Etihad talk to lenders on a bailout

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Jet Airways said on Monday it would seek shareholder approval next month to convert existing debt into equity, part of efforts by the cash-strapped Indian airline to resolve its financing problems.

Jet Airways, saddled with debts of about $1.14 billion, has been hit by fierce competition, rupee depreciation and high oil prices. The company owes money to banks, pilots, vendors and lessors - some of whom are considering taking back aircraft, sources have told Reuters.

The airline will seek a green light from shareholders to convert part or all of its loans into equity at a special meeting on February 21, subject to regulatory approval. It will also seek permission to convert future loans into equity, the airline said in a regulatory filing.

Jet, which controls a sixth of India's booming aviation market, will also seek approval to issue new equity and allow its lenders to nominate directors to its board, it said. The airline plans to increase its share capital to ?22 billion ($309.43 million) from ?2 billion.

Jet shareholder Etihad Airways met with the Indian carrier and State Bank of India earlier in January to secure some form of rescue deal, Reuters reported.

Jet has said it is talking to lenders to resolve its debt problems and is looking at injecting more cash into the airline and making boardroom changes. - Reuters