By reportedly agreeing to step down as chairman of India's financially-troubled carrier Jet Airways, the founder of the airline, Naresh Gopal has finally removed a major stumbling block in ongoing efforts to rescue the carrier from insolvency. The decision to relinquish his post as chairman followed a meeting between Mr Goyal, the airline's lenders led by State Bank of India (SBI) and the CEO of major shareholder Etihad Airways, Tony Douglas.
Goyal, who founded the full-service carrier 25 years ago, has reportedly also agreed to reduce his 51% stake in the airline but would continue to be a part of the company in some
capacity even after stepping down as chairman, reports said.
In the past months, Jet Airways has been in talks with shareholder Etihad Airways and Indian conglomerate Tata Sons for fresh funds or a stake sale to reduce a debt which has been estimated to be around US$1 billion. As a result, the carrier has been struggling to pay its pilots, vendors and lessors with the latter forcing the airline to ground over a dozen planes.
Bank consortium becomes largest shareholder
Last week, Jet Airways was forced to ground another six planes due to non-payment of dues to lessors, taking the total tally to 19 which is about 15% of its fleet. It has a fleet of about 123 mainly Boeing planes, including 16-owned aircraft.
Coinciding with the announcement, the airline also said last week that its board had approved a rescue deal which will make a consortium of banks, led by State Bank of India, its largest shareholders. The deal, which is subject to regulatory approvals, includes an equity infusion, debt restructuring and the sale or sale and lease back of aircraft.
A newspaper report said that SBI subsequently held a meeting with Jet Airways and its 24% shareholder Etihad, but no consensus was reached on some of the aspects of the bailout deal.
Etihad’s patience is wearing thin
In 2013, Etihad saved the Indian airline from bankruptcy, spending US$600 million for its 24% stake in the carrier, three take-off and landing slots at London Heathrow and a majority share in Jet’s frequent flyer programme.
Although Etihad has so far declined to comment, the Abu Dhabi carrier is reportedly reluctant to put more money into the airline including interim funds of about 7 billion rupees (US$99 million). However, the airline is still in discussions to raise its stake in Jet Airways but will not shoulder any management responsibility, a source aware of the matter said.
“Management of the airline is a hot sticking point that needs to be sorted out,” said the source, indicating that Etihad’s patience appeared to be wearing thin. It is thought that Goyal’s decision to step down as chairman may prompt Etihad Airways to take a more active role in the daily management of Jet Airways.
Nol van Fenema