Mumbai: For years, Naresh Goyal, founder and chairman of Jet Airways (India) Ltd, would lament that none of his two children—a son and a daughter—were interested in joining his airline business. Now, hit by a series of crises, the Mumbai-based carrier has turned to his son, Nivaan Goyal, to take a bigger role in the company founded by his father a quarter of a century ago, according to several people—including former employees, industry peers and friends.
For instance, it was Nivaan Goyal, who led the Jet Airways team in its last two meetings with a group of lenders led by the State Bank of India (SBI) in Mumbai in the past few weeks.
“I saw Nivaan Goyal (and not Naresh Goyal) representing Jet Airways during its negotiations with the lenders in the last two meetings in February," said a senior banker, requesting anonymity. “It seems that he is being given a bigger role in the company," the banker said.
To be sure, Nivaan Goyal has been working in various roles in Jet Airways since 2016 to learn the ropes, said a Jet executive, requesting anonymity. Prior to that, Nivaan Goyal, now in his mid-20s, spent over a decade studying in London.
His potential elevation to Jet Airways board comes at a time when a bailout plan proposed by the lenders has been approved by the board as well as shareholders. The bailout package proposes to meet a funding gap of nearly ₹8,500 crore in the airline. The lenders have also received approvals to convert their loans into equity.
The restructuring exercise will also see a drop in Naresh Goyal’s stake in Jet Airways from the current 51% and him relinquishing the chairman’s post.
Jet Airways is battling a squeeze on cash flow caused by higher costs and intense competition. This has led it to default on interest payment to lenders as well as lessors, and vendors like airport operators and oil marketing companies.
It has also delayed payment of salaries to some staff.
Jet Airways had gross debt of ₹8,411 crore as of end-September.
“Mr Goyal told me at a dinner a few years ago that his children were not interested to join his airline," said an executive at another airline, who did not want to be identified. “Nivaan’s induction into the airline’s board of directors means that Mr Goyal will still be calling the shots through a proxy," the person said.
Naresh Goyal, who built Jet Airways from scratch, is considered by peers, employees, friends and rivals as someone who’s shrewd and hardworking, and extremely smart with financials.
He is also someone who had complete control while running his airline, and didn’t give much space to either 24% stakeholder Etihad Airways PJSC or his managers to run the airline independently—at least, until recently.
“He (Naresh Goyal) is extremely strong on the P&L (profit and loss) side of his business but has his limits when it comes to divisions like MRO (maintenance, repair and overhaul) operations, and pilot and flight operations. So, he has hired some of the best talents in these divisions," said a former employee of Jet Airways, requesting anonymity.
“Goyal (and his wife) had a say in everything that happened in Jet Airways—from the selection of cutlery, to the planes," the person added.
An aviation consultant, requesting anonymity, said Jet Airways’ downward spiral started with the emergence of Gulf carriers, about a decade ago, and the mushrooming of domestic competition from budget airlines like IndiGo (InterGlobe Aviation Ltd).
A legend in the aviation world, Naresh Goyal, practically camped at telecom ministry for days during early 1990s to get permissions to set up telephone lines at his airline counters in New Delhi and Mumbai.
He also remains very popular among his employees for connecting with them on a personal basis. For instance, Goyal is said to have personally supported cancer treatment and dialysis of family members of his employees.
However, Jet Airways has delayed salary payments to a section of staff, including pilots, who are yet to get a portion of their December salary and salaries for the following months.
“I think a large part of the goodwill Mr Goyal had generated among his staff has been eroding of late, with the airline delaying salaries to its staff," said the airline executive mentioned above.
Naresh Goyal had last week sought support of his employees and assured them that the current situation will ease by 18 March.
“Towards this, I commit to you personally from my heart, that I am prepared to make any sacrifice to ensure your future comfort and prosperity, viability of the airline and in fact welfare of all the employees of the company," he wrote in the letter.
His letter to his employees came at a time when Jet Airways has shrunk its operations as lessors grounded several aircraft due to non-payment of dues, leading to multiple flights being cancelled.
Aviation consultant CAPA India expects uncertainty surrounding Jet Airways to be temporary. “(We) expect the restructuring and recapitalization package to be formalized soon, which will start the process of stabilization at Jet," Kapil Kaul, chief executive and director of CAPA South Asia, said recently.