New Delhi: State Bank of India (SBI), the largest lender to cash-strapped Jet Airways (India) Ltd, has asked the airline’s chairman Naresh Goyal, his wife and two other nominee directors to step down immediately, even as the bank said it was in the interest of lenders to revive the distressed carrier. SBI has asked Goyal, his wife Anita, and two nominee directors, Nasim Zaidi and Gaurang Shetty, to step down from the board as well as executive roles, a person aware of the development said on condition of anonymity.
In New Delhi, after a meeting with finance minister Arun Jaitley, SBI chairman Rajnish Kumar said that lenders to Jet Airways would make every effort to keep the airline from slipping into bankruptcy as it would further erode the company’s value.
SBI’s commitment to the revival of Jet Airways comes a day after the government took stock of the airline’s operations and advised it to take care of customers affected by flight cancellations. The airline now flies only 41 of the 119 aircraft it had before the crisis, the aviation ministry said on Tuesday.
Kumar said talks with Etihad Airways PJSC, which owns 24% in Jet Airways, were still on and the Abu Dhabi-based investor had not conclusively decided to sell its stake in the Indian airline.
A spokesperson for Etihad said that the airline “is working closely with Indian lenders, the company and key stakeholders to facilitate a solution for Jet Airways".
The turnaround plan proposed by the SBI-led lenders’ consortium will involve a change in its existing management, said a second person privy to discussions among Jet’s lenders and shareholders.
The plan being discussed among lenders and shareholders reached a deadlock recently, with Etihad expressing a wish to sell its stake in the airline due to differences over the terms of the scheme, rather than infusing fresh funds.
Mint reported on Wednesday that Etihad had offered to sell its entire stake in Jet Airways to SBI. Emails sent to Jet Airways on Wednesday remained unanswered at the time of publishing.
Kumar said no lender wanted to take Jet Airways to the bankruptcy courts. In a service industry where businesses operate with few physical assets of their own and rely a lot on brand name and customer confidence, bankruptcy proceedings could hurt the airline’s ability to remain in business.
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“The meeting with the finance minister was just to brief him. We have been working on a resolution plan for the last five months. The resolution plan was almost ready, but because of certain issues there is some delay. We need a little bit more time," said Kumar.
The meeting was also attended by Nripendra Misra, principal secretary to the prime minister, and civil aviation secretary Pradeep Singh Kharola. “We believe it is in the lender’s interest, the country’s interest, the aviation sector’s interest that Jet Airways continues to fly," said Kumar, adding that bankruptcy proceedings would be the last option.
On Wednesday, Jet Airways shares fell 4.82% to ₹218.00 apiece on the BSE while the benchmark Sensex ended flat at 38,386.75 points.