As the crisis at Jet Airways deepens, the airline’s lenders led by the State Bank of India are pushing for a change in management to revive the airline, bankers and top government sources said.
The Tata Group, which runs full-service airline Vistara, was earlier in talks to pick stake in Jet Airways. Indications are that discussions to buy a stake in Jet Airways could restart at the Tata Group. The talks had floundered the last time on promoter Naresh Goyal’s reluctance to cede management control.
Banks, that are a part of the consortium of Jet’s lenders, are learnt to have asked several of the airline directors including Goyal and his wife Anita Goyal to step down from the board. The government, as well as bankers, have indicated their reservations against taking Jet Airways through the bankruptcy process. Jet Airways employs about 17,000 people across various roles.
On Wednesday, the Jet crisis was discussed at a high-level meeting between Finance Minister Arun Jaitley, Principal Secretary to Prime Minister Nripendra Misra, Civil Aviation Secretary Pradeep Singh Kharola and SBI Chairman Rajnish Kumar.
Sources said banks were in favour of a change in management at Jet Airways. “Lenders feel that the present management is not able to run the company. Banks are trying to protect interests of both consumers and creditors and are working out a plan to revive Jet Airways through a change in management,” a source said.
“The meeting with the Finance Minister was just to brief him. I have conveyed the decision and the thinking of the lenders. We have been working on a resolution plan for the last five months. This plan was almost ready but because of certain issues there is some delay…All stakeholders (are important), government is the most important stakeholder, citizens, flyers of this country are important stakeholders. There is a unanimous view that until such time when all hope is not lost, efforts should be made to keep the airline running and everybody believes that Jet Airways is a good aviation property,” the SBI chief said after the meeting.
“Under IBC (insolvency and bankruptcy code), the resolution of a service industry like airline is nearly impossible and IBC means that we are grounding the airline…We will keep trying. As on date, I can say that not all hope is lost. We have not reached that decision point where we say enough is enough and nothing can be done,” he said.
Naresh Goyal currently holds 51 per cent stake in Jet while Abu Dhabi-based Etihad Airways has 24 per cent. It is learnt that at a meeting between Etihad CEO Tom Douglas and Rajnish Kumar in Mumbai on Tuesday, the UAE airline offered to sell its entire stake in Jet Airways to SBI. While banks were keen that Etihad come up with a workable plan involving fund injection at the earliest, it seems unlikely.
Etihad has offered its stake to lenders at a discount for around Rs 400 crore. Etihad invested $379 million in Jet Airways back in 2013 at a price of Rs 754.74 per share. On Wednesday, Jet’s scrip ended trading at Rs 218, down 4.8 per cent on the BSE.
In response to an e-mail query on its plans to offload its stake in Jet, an Etihad spokesperson said: “As we have consistently maintained, Etihad is working closely with Indian lenders, the company and key stakeholders as a minority shareholder, to facilitate a solution for Jet Airways”.
The bank-led provisional resolution plan prepared by the lenders currently estimates a funding gap of Rs 8,500 crore (including proposed repayment of aircraft debt of Rs 1,700 crore) to be met by an appropriate mix of equity infusion, debt restructuring, sale, sale and lease back and refinancing of aircraft, among other things.
On account of non-payment of dues to its aircraft lessors, the airline is currently operating with 41 aircraft compared with 119 in its fleet. Additionally, about 1,000 pilots on Jet’s roster have threatened to stop flying from April 1 if their salaries are not cleared by March 31.