Naresh Goyal has finally quit as chairman of beleaguered Jet Airways, ending months-long suspense over the future of India's largest full service carrier. Goyal, who founded Jet Airways more than 25 years ago, and his wife Anita Goyal also stepped down from the board of the cash-strapped airline on Monday, the Economic Times reported.
In another significant deelopment, the stake of the Goyals in Jet Airways will be slashed to 25.5 percent from 51 percent currently. ET reported that a formal announcement would be made by the company soon. Ahead of the crucial jet Airways board meeting on Monday, speculation was rife that Goyal would step down, meeting one of the key demands of prospective white knights who would offer a lifeline to the sinking airline.
The launch of Jet Airways in 1993 marked the opening up of the rusty Indian economy. It's a paradox that, decades later, the iconic entrepreneur is stepping away from a company that redefined its business sector.
Goyal changed the aviation scene in the country
Jet's troubles came to a head last year as its mounting debts spiralled out of control. The troubles started with problems in debt servicing and was followed by grounding of aircraft, flight cancelations, delayed salaries and pilot strike over pay. It was expected that UAE's Etihad Airways, a major shareholder in Jet, would come to the airline's rescue. However, Etihad wanted Goyal to step down as chairman and slash the holdings from 51 percent.
Goyal, storied entrepreneur who changed the aviation scene in the country, defied odds and decided to fight on. It was then rumoured that the Tata group would pick up a major stake in the carrier and inject much needed funds. However, with no deal taking place, Jet became sicker through the next several months. The troubles worsened in recent weeks, giving rise to chatter over the carrier's imminent insolvency.
Jet Airways - Key facts
- Naresh Goyal launches the airline in 1993.
- Jet becomes a listed company in 2005.
- Goyal started his career working as a marketing executive in the airline industry. He later launched a marketing agency called Jet Air. When Goyal started his first business venture, his mother had sold her jewellery to raise the seed capital.
- After starting operations with four Boeing aircraft, Jet Airways became an international carrier in 2004 when it started flights to Colombo.
- Jet Airways acquired rival Sahara Airlines in 2007.
- Jet Airways survived a major scare in 2008, when global airline majors faced headwinds. Jet let nearly 2,000 employees go and restructured the operations to stay in business.
- In its 25 years of operations, Jet Airways aircraft have not been involved in any airline accidents where lives were lost.
- There are more than 16,000 employees in Jet Airways. As many as 2000 of them are pilots.
- At the end of last year, Jet Airways' net debt stood at 81.5 billion rupees ($1.2 billion)
- In the year ended 31 March, 2018, the airline reported a loss of Rs 636.45 crore. Peers such as SpiceJet and Indigo had reported impressive profits during the same period.
- Most of Jet's debts are dollar-denominated and hence a continued fall in the rupee has worsened the debt problem.
- Abu Dhabi's Etihad Airways owns 24 percent in Jet Airways. Goyal had once turned down Etihad's offer to pick up controlling stake in Jet Airways.
- Jet Airways's efforts to raise loans in the markets failed as banks insisted on a turnaround commitment. Getting loans became hard as Jet was laden with significant cost burdens.