The founder chairman of Jet Airways, Naresh Goyal, has now resigned as the chairman of the company. He and his wife, Anita Goyal, have also stepped down from the airline’s board. As of now, the lenders to jet have taken over all the operational and management duties. There will soon be an auction process during which the lenders will decide who will be a new strategic investor for Jet Airways. With these new developers, lenders will now own more than half of the shares of Jet Airways. Mr. Goyal’s shares will drop from 50.1% to a lower amount.
The lenders have created an interim management committee in order to handle the day to day operations of the airlines. It is also said that State Bank of India will pour in 1,500 Crore into the airline through debt instruments against the security of the airline’s assets. With Jet facing a mountain of debt, the company has been defaulting on its loans, which is what has led to this dramatic turn of events. Over the last few months, Jet Airways has been grounding more and more flights, and this signaled to SBI that the airline is not able to manage its daily operations. As a result, they asked Mr. Goyal to step down from his role, seeing that the company is now in shambles.
According to Mr Rajnish Kumar, SBI Chief, the lenders do want Jet Airways to continue to function, instead of forcing it into bankruptcy. He said “We believe that it is in everybody’s interest that Jet Airways continues to fly,”
There was also a fund infusion plan in the works. Etihad was supposed to infuse 1,600 – 1,900 crore into the failing airline. This infusion falls right under the 25% requirement for an open offer. Above this, the lenders were also supposed to infuse an addition 1,000 Crore. However, Etihad did not immediately and blindly jump to Jet’s rescue. They wanted the team to provide a restructured strategy before making the first transaction of 750 Crore, which was required on an immediate basis. Finally, Etihad called it quits and decided that it was not going to be a part of a sinking ship.
With SpiceJet and IndiGo far ahead of Jet in terms of the pricing war, the only way Jet’s planes could continue to fly were if there was a great influx of cash, which there wasn’t.
Jet has filed an updated under the Stock Exchange. The filing says the following:
“Two nominees of promoter viz. Mr. Naresh Goyal and Mrs. Anita Goyal, and one nominee of Etihad Airways PJSC to step down from the Board. Additionally, Mr. Naresh Goyal to also cease to be the Chairman of the Company.
Immediate Funding support of up to ~ INR 1500 crore by Lenders by way of issue of appropriate debt instrument against the security of its assets which will restore normalcy to Company’s level of operations.
Resignation by Mr. Naresh Goyal, Mrs. Anita Goyal, and Mr. Kevin Knight, as directors of the Company, and induction of 2 (two) nominee directors of Lenders. Additionally, Mr. Naresh Goyal will also cease to be the Chairman of the Company.
The bidding process to be initiated by Lenders for sale/issue of shares to a new investor(s), the process expected to be completed in June quarter.
Constitution of an Interim Management Committee to manage and monitor the daily operations and cash flow of the Company.”