Bankruptcy is the ‘last option’ for Jet Airways, State Bank of India’s (SBI) chairman said on Wednesday, adding that it might still be possible to draft in a new investor to keep the airline flying.
“We believe it is in everybody’s interest that Jet Airways continues to fly,” SBI Chairman Rajnish Kumar told reporters after meeting government officials, adding that placing Jet into bankruptcy would mean grounding the airline.
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The SBI chief said that a resolution plan is “almost” ready and that it would not involve a bailout for any individual, including the airline’s founder and chairman Naresh Goyal.
Jet has more than $1 billion in debt, and owes money to banks, suppliers, pilots and lessors — some of whom have started terminating leases with the carrier.
The government has asked State-run banks, led by SBI, to rescue Jet without pushing it into bankruptcy, two people within the administration have told Reuters as Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election.
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Talks with Etihad Airways, Jet’s largest shareholder, to secure a rescue deal are also ongoing, the SBI chief said, adding that the Abu Dhabi-based airline has not “conclusively” decided to exit the venture.
“There are certain conditions they want fulfilled and that is that the airline should be professionally managed and without interference,” Mr. Kumar said.
Etihad had earlier said that if it were to invest more money then the Jet’s founder Goyal must step down and take a less prominent role.
Changing management
A senior Finance Ministry source, who was at the meeting, said lenders to Jet are trying to revive the airline by changing the management, which includes Mr. Goyal.
Mr. Goyal had agreed to step down as chairman of Jet Airways and reduce his stake from 51%, sources told Reuters, to secure a rescue deal for the airline he established 25 years ago.