Sensex Trades Marginally Higher; Tata Motors & SBI Top Gainers

According to reports, ICRA has revised the long-term rating (assigned to long-term loans and non-convertible debentures) to D from C. The short-term rating has been revised to D from A4.

Last month, Jet was in talks with the SBI for raising Rs 15 billion short-term loan to meet its working capital requirement and some payment obligations.

Reportedly, Jet Airways' strategic partner and Middle-east carrier Etihad, which holds a 24% stake in the Indian full-service carrier, is likely to provide a guarantee for the loan.

The Naresh Goyal-controlled airline, which has posted three consecutive quarterly losses of over Rs 10 billion each since March, already has as much as Rs 80 billion of debt on its books as on September 30. Rating agency ICRA has already cut the rating on Jet Airways borrowing programmes.

Domestic airlines have been struggling to make a profit because of a rise in operating costs.

The new year began on a positive note for domestic airlines as state oil marketing companies (OMCs) slashed aviation turbine fuel (ATF) prices by 14.7%.

Note that this is the second consecutive drop in jet fuel price and the sharpest cut since November 2008.

The surge in crude oil prices led to the domestic airlines posting a loss of 23.4 billion in the September quarter.

Reports state that in the first half of FY19, the listed airlines together lost around Rs 0.2 billion per day collectively registering a loss of Rs 36.4 billion.

Crude oil prices, however, are on a decline over the last few weeks over concerns of a supply glut.

Oil prices fell after the US showed signs of following Asia into an economic slowdown, although supply cuts by producer club the Organization of Petroleum Exporting Countries (OPEC) kept declines in check.

Reportedly, OPEC oil supply fell by 460,000 barrels per day (bpd) between November and December, to 32.7 million bpd, as top exporter Saudi Arabia made an early start to a supply-limiting accord, while Iran and Libya posted involuntary declines.

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Disclosure: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. ...

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