India's major private airlines Jet Airways' rescue plan is scheduled to be discussed for approval on Monday. Etihad board will be deciding the on the proposed plan which will witness a major change in the promoters' shareholding, financial daily Business Standard has reported. As per the final resolution plan, Chairman Naresh Goyal's stake will stand at 17 per cent from the existing 51 per cent. Moreover, he will have to step down from the board as demanded by Jet's joint venture partner Etihad.
The resolution plan seeks to Etihad holding 24.9 per cent in Jet, marginally up from its 24 per cent current stake. The State Bank of India-led consortium of lenders will own 30 per cent, while new investors National Infrastructure Investment Fund will hold 20 per cent in the beleaguered airline.
The resolution plan has been in the pipeline for a long time and it went through multiple changes due to lack of agreement among all the stakeholders. Abu Dhabi-headquartered airline Etihad has raised serious apprehensions about the structuring of the deal, but it is learned that Etihad board will give its go-ahead to the plan as 'they have got virtually everything they wanted''. In the highly vibrant market, Etihad is very much keen taking control of an airline.
After along deliberations, Jet founder Goyal and Etihad signed a memorandum of understanding (MoU) based on the recast deal. Seemingly adamant Naresh Goyal did want to dilute his stakes in the airline he founded but Etihad was entirely against his wish. In fact, Etihad also wanted Goyal to be out of the Airline board which is expected to happen soon.
Etihad has been continuously investing in Jet Airways as the airline also wants a pie from the fastest growing domestic market. The strategic ties between India and the UAE have helped as a catalyst. But Etihad has its own set of challenges including and restructuring its network and fleet orders.
Notably, Jet has already grounded its 40 per cent of its fleet along with cancelling hundreds of flights across routes. The situation has become so critical that its lessors have threatened to take away planes if a consensus on the resolution is not reached by end of the month. The airline has defaulted on its repayment of the loans for several times in the past. Also, the salaries of its staff have been delayed for months now.