Jet Airways shares soar 23% in 2 days after founder Naresh Goyal exits
Under the rescue plan, Jet's lenders will issue a loan of ₹1,500 crore to meet the airline's obligationsAn interim management committee will be formed to oversee operations
Jet Airways Ltd's shares today climbed as much as 9% to ₹277 on BSE to a near two-month high after founder and chairman Naresh Goyal stepped down and lenders took control of the airline, in an attempt to rescue it from bankruptcy.
Banks on Monday moved in to take a majority stake in the airline after Jet failed to convince potential investors, including its largest shareholder Etihad Airways, to save the airline.
Under the rescue plan, Jet's lenders, led by State Bank of India (SBI), will issue a loan of ₹1,500 crore to meet the airline's obligations and will form an interim management committee to oversee operations.
As part of the bailout plan, Jet's lenders will take a controlling stake of just over 50% and will start a bidding process to sell their stake in the airline to a new investor.
Umesh Mehta, head of research at Samco Securities, said," This can be a breather for the company which needs funds to pay-off outstanding dues. A new investor can come given that no legacy management will be inherited."
On Monday, Jet shares soared 18% in intraday trade after reports said Goyal and his wife would leave the board, before settling at ₹254, up 13%.
Burdened with more than $1 billion of debt, Jet is struggling to stay afloat. It has delayed payments to banks, suppliers, pilots and lessors - some of which have forced the airline to ground as many as 40 planes.
Jet has survived collapse once before when it got close to running out of cash in 2013. On that occasion, Abu Dhabi's Etihad bought a 24% stake to keep the airline running.
But competition from low-cost carriers, such as IndiGo and SpiceJet Ltd, together with high oil prices, hefty fuel taxes and a weak rupee piled on the pressure in recent months.
At 10:20 am, Jet Airways shares held on to most of its gains and traded 7.5% higher at ₹273.15 on BSE. (With Agency Inputs)
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