Mumbai: Struggling Jet Airways is likely to finalise a resolution plan with its lenders this week and founder and chairman Naresh Goyal is likely to step down from the board, giving up majority control, according to sources. As part of the rescue plan, Abu Dhabi-based Etihad Airways will double its stake to 49 per cent, the sources said. Etihad is in talks to lift its holding from the current 24 per cent, according to a TV channel report on Monday. Jet founder Naresh Goyal’s stake could drop to 20 per cent from 51 per cent, and that he’ll stand down as chairman, CNBC-TV18 reported.
Shares of Jet Airways closed 16 per cent higher on BSE. The company ranks as India’s biggest full-service airline, but has failed to post a profit in nine of the past 11 fiscal years. Cash is running short as fare wars depress revenue and turbulent oil prices increase costs. The final contours of the resolution plan will be signed by the lenders after their meeting this week, the sources said, adding that banks had asked the current promoters to bring in funds as part of the restructuring plan under discussion.
Etihad Airways will likely bring in fresh funds that will see its stake go up from 24 per cent held currently, they said. As per the current norms, foreign airlines are allowed to invest up to 49 per cent stake in domestic airlines. Etihad Airways’ fund infusion into the company will also likely trigger an open offer for Jet Airways, the sources added. Naresh Goyal’s son Nivaan Goyal may replace him on the board, said a banker who is aware of the development.
An increase in Etihad’s Jet stake would come at a time when the Arabian carrier is cutting thousands of jobs and shrinking its fleet amid mounting losses from over-expansion and failed investments. India remains an attractive prospect because of the size of its travel market and the pace of growth. Etihad said that it does not comment on rumor or speculation. Jet didn’t immediately respond to requests for comment. The carrier said it had made no decision requiring a stock-market disclosure.
