It is finally “Jet Set Go” for the debt ridden private airline company Jet Airways. Finance ministry's FDI approval arm FIPB or the Foreign Investment Promotion Board (FIPB) has approved Jet Airways' plans to raise $400 million through sale of fresh shares to qualified foreign institutions.
The Naresh Goyal-owned Jet Airways is in dire need to infuse funds as it is struggling to service its huge chunk of debt, estimated at around Rs 15,000 crore as of July of this year.
Jet Airways had reported a net loss of Rs 406.69 crore in the second quarter of the current fiscal as against Rs 384.5 crore in the year-ago period.
Jet Airways may need to issue 7.92 crore shares to raise $400 million but the company would need to get cabinet clearance as any FDI above Rs 600 crore need to get cabinet clearance.
At the moment 49 per cent FDI is allowed in aviation sector, but foreign airlines are barred from buying equity. Currently foreign shareholding in Jet airways is around 5 per cent which gives ample headroom to Jet to raise funds through stake sale.
With Jet raising $400-million FDI, the holding of Naresh Goyal, the principal promoter of the company, will shrink significantly from the current 80 per cent. Jet has already informed FIPB that it might not be possible to raise funds from the domestic market.