Lenders leave no stone unturned to keep Jet Airways afloat
In a desperate attempt to rescue the cash-strapped Jet Airways, the beleaguered airline's lenders are formulating a revival plan through a change in its management.
Presently, the carrier is flying only about a third of its fleet. This is because several of its aircraft have been grounded after the Naresh Goyal-led company failed to pay dues to lessors. Pilots have threatened to go on strike should the resolution plan be delayed and their salary dues not cleared by the end of the month.
SBI is the lead lender to the fraught airline. SBI’s chairman Rajnish Kumar met with the Finance Minister Arun Jaitley, along with the Aviation Secretary Pradip Singh Kharola and the Principal Secretary to the Prime Minister Nripendra Misra, to discuss the revival plan.
Etihad Airways has offered to sell its 24 per cent stake in Jet Airways to SBI at a loss. Furthermore, it has also offered to sell SBI its 50.1 per cent stake in Jet Privilege, estimated to be worth Rs. 1,000 crore. Lenders are earnestly trying to dissuade Etihad Airways from selling its stake as it would result in a crash of the entire bailout plan for Jet Airways.
Based on the draft resolution plan submitted to the lenders last month, Etihad was supposed to fork in nearly Rs. 1,800 crore as fresh equity, thereby increasing its stake to 24.9 per cent. This is just below the open offer threshold. Meanwhile, bankers were to infuse another Rs. 1,000 crore for a 29.5 per cent stake. The lenders were to give Rs. 750 crore to Jet Airways immediately in exchange for the latter’s stake in Jet Privilege.
According to the plan, the Rs. 450 crore that Jet Airways owed to entities concerning Naresh Goyal was to be converted into equity. Goyal’s infusion of Rs. 250 crore was to leave him with a holding of 17.1 per cent and not over 22 per cent. Reports state that Etihad wishes to withdraw from the rescue deal as Goyal refuses to reduce his shareholding and step down from active management.
In anticipation of Etihad's withdrawal, Jet Airways has been on the lookout for a suitable strategic partner. This will undoubtedly ensue in a fresh round of resolution talks. Rumours have it that Goyal approached Qatar Airways for a potential investment. However, Qatar Airways will climb on board only if Goyal assumes the position of a minority investor.
Struggling under a colossal loan of Rs. 8,200 crore, the stock of Jet Airways opened at Rs. 219.30 per share on Friday, and hit a high and low of Rs. 225.80 and Rs. 219.00, respectively. At 10:50 am, the stock was trading at Rs. 223.60, up 2.57 per cent.