Naresh Goyal to end control of Jet Airways, Etihad to raise stake to 49%
14 January 2019
Jet Airways, which is hard put to find extra resources to run the airline, is reported to have decided to offer partner Etihad Airways another 25 per cent stake in the beleaguered carrier, raising its stake from 24 per cent to 49 per cent.
While this will bring down promoter-chairman Naresh Goyal’s stake in Jet Airways to around 20-25 per cent, Goyal's son Nivaan Goyal is likely to be included as non-executive director once a resolution plan for the embattled company is finalised, according to reports.
Naresh Goyal along with his wife currently holds 51 per cent stake in Jet. This would be brought down to 20-25 per cent while his voting rights on his stake will also be capped at 10 per cent, say reports.
With Jet Airways set to run out of cash in about a month and lenders demanding more than a stake reduction for a $900 million revival package, the Naresh Goyal-promoted airline was earlier reported to be looking to restart stake sale talks with Tata Group.
Goyal has been discussing a deal with lenders and its partner Etihad Airways PJSC, after talks with Tatas deadlocked, all of them have demanded Goyel’s exit from the airline’s board as the main condition for injecting cash into the loss-hit carrier.
The decision to allow Goyal’s son as a non-executive director seems to be a concession being offered by the partner airlines.
Jet, which is India’s biggest full service carrier by market share, owes money to lessors and vendors, has delayed salary payments to pilots and senior executives and is cutting flights on non-profitable routes to save money.
Jet also defaulted on debt payments to a consortium of Indian banks and that it was in talks with the consortium led by State Bank of India.
The carrier has posted three consecutive quarterly losses of over Rs 1,000 crore each since March 2018. Rating agency Icra has also downgraded its ratings on the airline's long-term and short-term fund facilities.
If Jet Airways, which has overdue debt and payments to staff, lessors and airports, fails to find an investor or financier, the airline could go the Kingfisher way.