Debt laden Jet Airways has said lenders led by State Bank of India and stakeholders are working on a comprehensive resolution plan to turnaround the airline amid reports that Etihad Airways is likely to increase its stake in the airline to 49 at a discount.
It has been working on various cost cutting measures, debt reduction and funding options including infusion of capital, monetisation of assets including the company’s stake in its loyalty programme in consultation with various key stakeholders, Jet Airways said in a stock exchange filing. “SBI in consultation with the other members of the consortium and the other stakeholders has been working on a comprehensive resolution plan towards a turnaround of the company for its sustained growth and restoration of financial health,” the airline said. The said resolution plan contemplates various options on the debt-equity mix, proportion of equity infusion by the various stakeholders and the consequent change in the composition of the company’s board of directors.
Etihad, which holds 24 per cent stake in Jet Airways, had reportedly offered to buy Jet shares at a 49 per cent discount and release $35 million to bail out the carrier. Etihad CEO Tony Douglas has already written to lenders led by SBI about the possibility of increasing the stake. However, Etihad wants Jet’s founder and Chairman Naresh Goyal to step down from the board and his stake to be slashed to 20-22 per cent from 51 per cent. Etihad has also reportedly sought exemption from making an open offer to other shareholders.
Jet Airways shares declined by 7.95 per cent to Rs 271 on the BSE on Wednesday. According to Jet Airways, the implementation of resolution plan, once agreed to and approved by stakeholders, including board of directors, will be subject to applicable statutory, regulatory, contractual and corporate approvals. “We wish to clarify that the resolution plan is presently under active discussion amongst the stakeholders and the various options therein, being privileged and confidential, are yet to be crystallised and agreed to by the stakeholders in the best interests of the company,” Jet said.
Though it has been in discussions with banks for a short-term loan, cautious bankers asked for a concrete plan for the revival after they burnt their fingers in Vijay Mallya’s Kingfisher Airlines episode.