Mumbai: The founder of cash-strapped Jet Airways, Naresh Goyal, has stepped down as chairman of the company. His wife Anita, too, has stepped down from the board of the airline they founded 25 years ago. The resignation is likely to clear the decks for an immediate bailout of Rs. 1,500 crore by lenders. Goyal’s exit was a pre-condition set by bankers before they agreed to the infusion of funds.
As part of the deal, the banks, led by State Bank of India, will convert their debt into equity and take a controlling stake in the airline for a token sum of 1 rupee. Jet has been saddled with a grounded fleet, spiralling dues to banks, suppliers, pilots and lessors.
Its debts exceed $ 1 billion. Within minutes of Monday’s announcement, the company’s stock jumped 13%. The investors seem to be happy at the prospect of Goyal giving up control of the company. In a stock market filing, the company said that banks would lend around $210m to keep it afloat until it starts to sell shares to new investors.
As the banks convert the debt they are owed into equity, Goyal’s controlling stake in the company would diminish accordingly. Goyal and his family currently own 52% of the airline. It is unclear how much they will eventually retain but they will lose their majority stake to the banks.
Kevin Knight, nominee of Etihad Airways, has also resigned as director. The exits have come days after reports that the government has asked state-run banks to bail out Jet Airways for the moment, to prevent the airline going bankrupt. Jet Airways has a fleet of 119 aircraft. Of these, 54 aircraft have been grounded due to non-payment of dues, sources told NDTV.
Jet Airways is not flying another 24 planes because of nonmaintenance, they added. This means that around two-thirds of the fleet of what was India’s top private airline is grounded for various reasons. Aviation regulator DGCA had last week said that only 41 of the airline’s aircraft were operational.
