Founder of India's Jet Airways quits as crisis grows

Etihad Airways nominee Kevin Knight has also resigned from the Jet Airways board
Founder of India's Jet Airways quits as crisis grows
Jet Airways, set up by Naresh Goyal in 1993, was the second largest Indian airline for a long time, until financial troubles started mounting about few months ago.
By James Mathew
Mon 25 Mar 2019 03:34 PM

The crisis facing the debt-laden Indian carrier Jet Airways took another turn on Monday, with its chairman Naresh Goyal and his wife Anita Goyal stepping down from the board.

Etihad Airways nominee Kevin Knight also resigned from the Jet Airways board.

The resignations followed the meeting of the airline board in London.

“Naresh Goyal, the founder of Jet Airways (India) Ltd), has resigned from the board of the airline", the company said in a statement to Bombay Stock Exchange.

Etihad Airways, which currently holds 24 percent stake in Jet Airways, had two nominees on Jet Airways board of directors, Kevin Knight and Robin Kamark.

The statement said that the lenders of the airline, led by the State Bank of India, will constitute an interim management at Jet Airways, which will monitor the daily cash flow and operations of the airline at the instruction of lenders.

The lenders will also immediately pump about $217 million into Jet Airways by way of issue of appropriate debt instruments against security of assets.

This exit of Goyals from the Jet management will pave the way for the State Bank India–led bankers consortium to the beleaguered Jet Airways to scout for a new investor for the airline.

According to senior government sources, in the interim period, the banks could take charge of the airline by converting their debt to equity to increase their combined stake to 50 percent or more.

The sources said the SBI-led lenders consortium may also bring in a professional to run Jet Airways for a short period before it succeeds finding a new investor for the cash-strapped carrier.

Earlier, the bankers consortium proposed a restructuring proposal for Jet which envisaged, among other conditions, conversion of bank’s debt into equity, promoters infusing additional funds and also the carrier going in for a sale and lease back of the aircrafts it owned. 

Jet Airways, set up by Naresh Goyal in 1993, was the second largest Indian airline for a long time, until financial troubles started mounting about few months ago.

Default of rental payments to its leasing companies have led to grounding of Jet’s planes from beginning of this year, reaching the number of grounded planes close to 60 till today.

Several other planes of Jet are also grounded due to maintenance related issues. It is currently said to be operating only about quarter of its fleet.

The airline, which has a debt of over $1 billion, is said to owe about $500 million by way of refund to passengers due to flight cancellations.

Pilots of Jet Airways have also threatened strike from April 1 unless the airline signs a letter of intent to pay their salary dues.

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