The interim resolution plan for Jet Airways, worked out by lenders to save the airline with a recapitalisation package of ₹8,500 crore seems to be collapsing with Jet Airways founder and chairman Naresh Goyal, and Etihad Airways, which holds 24% stake in the airline, developing serious differences over the modalities, leading to a deadlock.
While the conditions put forth by Etihad Airways to infuse fresh capital in Jet have not been fulfilled by lenders and Mr. Goyal, Etihad is also believed to have rejected Mr. Goyal’s condition that his holding, post restructuring, must not be capped at 22%.
Etihad, which has sought the complete exit of Mr. Goyal and his wife Anita Goyal from managing the affairs of the airline and from executive roles, believes that Mr. Goyal would later increase his holding in the company and may assume control through this move.
Though the Jet Airways board and shareholders have approved the resolution plan, Etihad Airways board has not approved the proposal to put more money in Jet Airways. Besides, Etihad is not in the best of financial health. The airline, on Thursday, reported net loss of $1.28 billion for 2018.
Critical times
Amid disagreement between the two major shareholders and continued delay in the implementation of the Bank-led Interim Resolution Plan (BLIRP), Jet Airways has flown into critical times.
The next few days are crucial to determine whether the airline can survive or not, people familiar with the development said.
“Last evening [Thursday] Etihad communicated its position to the lenders and it was in the negative. It is still not known whether it is doing this to have its way or has developed a cold feet as more money would be required to be invested in future,” a person in the know of the development said.
“After Etihad’s tough talk, Mr. Goyal is believed to have softened his stance. Still, there is some hope to revive the talks. Now, it is over to the banks and the government to prevail upon Etihad to agree, so that the airline does not close down, rendering over 16,000 people jobless,” the person said.
“It is immaterial whether Mr. Goyal is there or not. The airline has to be saved and recapitalised immediately. Things are heading nowhere because of greed and demand from both sides,” the person added.
While about 60% of the airline’s fleet is on the ground due to non-payment of lease rental or want of spares or capital, most of the remainder could be grounded by next week.
The senior management has not been paid salaries for January and February 2019 apart from a large part of December wages. Employees below manager grade, who have been regularly getting salaries, may not be paid this month unless the resolution plan kicks in.
Cash is running out for day-to-day operations as a large part of the fleet is grounded and ticket sales revenue is depleting due to uncertainty in flight operations.
The airline, which defaulted on repayment of a foreign currency loan, is expected to default on one more by the end of this month.
E-mails to Jet Airways and Etihad Airways remained unanswered till the time of going to press. When contacted, a senior State Bank of India (SBI) executive said, “It is work in progress. Very soon we will have a solution. We have to align and take care of all the shareholders. The situation is complex and it will take time.”
“It is by desire that this airline keeps running, That is the fundamental difference between this and other NPA accounts. We need comprehensive solution and not patchwork. We are hopeful to have a resolution in one week,” the executive added.
SBI is the lead banker and is taking the prime role in the resolution process. Jet Airways’ shares closed with a loss of 0.82% at ₹234.95 on the BSE.
(With inputs from Manojit Saha)
