A file photo of Jet Airways founder Naresh Goyal
A file photo of Jet Airways founder Naresh Goyal

Naresh Goyal agrees to step down as Jet chairman

  • Etihad Airways, which owns a 24% stake in Jet Airways, is however still to agree on several proposals put forward by a group of lenders led by SBI
  • Naresh Goyal’s stake in Jet Airways will drop from 51% to around 22% once the lenders’ debt is converted into equity

Mumbai: Jet Airways (India) Ltd’s founder Naresh Goyal has agreed to step down from the airline’s board as its chairman as part of a plan to secure a rescue deal for the cash-strapped company, a person familiar with the matter said.

Etihad Airways, which owns a 24% stake in Jet Airways, is however still to agree on several proposals put forward by a group of lenders led by State Bank of India (SBI).

The lenders have secured approval from shareholders to convert their unpaid loans into equity and infuse funds after the company defaulted on interest payments. The airline has also failed to pay dues to aircraft leasing firms for months and lessors have grounded 18 of its planes, according to industry sources.

Once the loans are converted into equity, Goyal’s stake in the airline will fall from 51% to around 22%, while that of Etihad will halve to 12%.

At a meeting held in Mumbai on Wednesday to discuss the future of Jet Airways, lenders led by SBI and Etihad failed to agree on several issues, said two people familiar with the matter, including the person cited above.

The issues included Etihad’s refusal to pledge shares in Jet Airways and Jet Privilege Pvt. Ltd (JPPL), the company that runs its frequent flyer programme, the first person said on the condition of anonymity.

“Etihad has also not agreed to provide bridge funding of 750 crore," the second person said.

“Discussions are still on between the stakeholders," the first person said, adding that a date for the next meeting has not been finalized.

Goyal has agreed to reduce his shareholding in Jet Airways from 51% to close to 22%, the first person said, adding that the current promoter of the airline has also agreed to pledge his shares in JPPL.

Etihad owns a 50.1% stake in JPPL, while Jet Airways holds 49.9%.

Jet Airways, Etihad and SBI did not immediately respond to queries.

A senior Jet Airways executive said on the condition of anonymity that the management hopes that the banks-led resolution plan is implemented at the earliest.

“Once the resolution plan is implemented and fresh funds are infused into the airline, we can expect it to stand back on its feet again and perhaps take advantage of the lower oil prices to turn around operations," the executive said.

The airline had a gross debt of 8,411 crore as of September-end, including aircraft debt of 1,851 crore.

Shayan Ghosh contributed to this story.

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