Founder Naresh Goyal exits Jet Airways board amid salvage bid

Muriel Colon
March 26, 2019

A man speaks on the phone outside the Jet Airways headquarters in Mumbai, India, March 25, 2019. It will re-deploy several of its grounded aircraft and renew numerous routes it had temporarily suspended.

Last week, Reuters reported, citing two people in the know, that the central government had asked state-run banks to rescue the airline without pushing it into bankruptcy as Prime Minister Narendra Modi sought to avert thousands of job losses weeks before a general election. Once that is done, the banks are expected to offload their stakes.

As part of the bailout plan, lenders will start a bidding process to sell their stake in the airline to a new investor.

Etihad has been reluctant to commit more funds to Jet given its own financial problems and its differences with Goyal. "By launching a truly world class airline, Naresh and Anita Goyal made India proud", Singh said in a statement.

In the exchange filing, Jet Airways said the company would receive immediate funding of up to Rs 1,500 crore from its lenders.

The banks will also give the airline a fresh loan of Rs 1,500 crore to meet payments and restore normal operations and the lenders will form an interim management committee to manage the airline, Jet said.

Jet's board also approved a plan that will help the airline keep afloat.

According to Reserve Bank of India (RBI) regulations, lenders must resolve cases pertaining to defaulting companies such as Jet Airways within 180 days of their first default.

Even as news of Goyal's departure led to a rally in Jet's shares, which ended the day 12.4 percent higher, analysts say there is still a long road ahead.

Jet Airways has survived a near-death experience once before; in 2013, Abu Dhabi's Etihad Airways injected $600 million of capital for a 24 percent stake in the airline, three London Heathrow slots and a majority share in its frequent flyer programme. Etihad, which is expected to conclusively take a call on exit from Jet in a board meeting end of this month, has retained a board seat. "We urgently need to address structural challenges that make India's airlines uncompetitive to airlines around the world".

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