In a major development, Jet Airways founder Naresh Goyal has agreed to step down as the chairman of the beleaguered airline. After months of deliberation, the exit of Naresh Goyal would allow the board to go ahead with the debt restructuring plan of the cash-strapped airline.
According to Reuters, Goyal's decision to step down as chairman comes a day after an urgent meeting of lenders with Goyal and Etihad Airways Chief Executive Officer Tony Douglas. The parties discussed various issues between two promoters as well as lenders and Etihad.
As per the plan, a part of debt would be converted to long term equity-like instruments. Moreover, rescheduling of loans is also on cards which would help the debt-laden airline to repay its past loans.
The plan also includes an allotment of 11.4 crore shares to the lenders which would eventually make them the largest shareholder. During the meeting, Goyal, who holds 51 per cent stake in the airline, proposed to step down to save one of India's biggest private airlines.
Meanwhile, Eithad, which owns a minority stake of 24 per cent in Jet Airways, continues to be reluctant on infusing funding of about Rs 7 billion to the airline. Since last few months, Jet Airways is burdened with a billion dollars in debt.
The airline has defaulted on its loan repayments multiple times recently. As a result, it hasn't paid its paid pilots, leasing firms and suppliers for months. The non-payment of debt has forced the lessors to ground more than a dozen of its planes this month. In fact in a filing to the exchanges earlier today, Jet informed that six additional aircraft has been grounded for the same reason.
Bloomberg has reported the representatives from Jet Airways and Etihad was told by the lenders that they would need to inject equity to maintain their shareholding and stabilize its operations. But minority stakeholder, Etihad proposed stringent terms and conditions which were not acceptable to lenders; the discussion is yet to reach a conclusion.
It is to be noted that the debt restructuring plan is still at a nascent stage and would need the consent of at least 66 per cent of the lenders before State Bank of India led consortium can do something substantial.