Exit mode: Etihad CEO wants Jet Airways chairman Naresh Goyal to step down

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New Delhi | Published: January 17, 2019 6:20:12 AM

Jet Airways on Wednesday confirmed that the consortium of banks led by the State Bank of India (SBI), along with other stakeholders, is contemplating various options for a turnaround that includes various options on the debt-equity mix, proportion of equity infusion by the various stakeholders and the consequent change in the composition of the company’s board of directors.

jet airways, etihad, HDFC Bank, ICICI Bank, Punjab National Bank, Axis Bank, Canara BankJet’s statement came after reports surfaced on Wednesday morning that Abu Dhabi-based Etihad Airways, which currently holds a 24% stake in the airline, has offered an investment proposition in the cash-strapped carrier at Rs 150 per share along with an immediate infusion of million with certain conditions.

Jet Airways on Wednesday confirmed that the consortium of banks led by the State Bank of India (SBI), along with other stakeholders, is contemplating various options for a turnaround that includes various options on the debt-equity mix, proportion of equity infusion by the various stakeholders and the consequent change in the composition of the company’s board of directors.

However, a meeting of the lenders on Wednesday to discuss various options remained inconclusive. An official with a large public sector bank said, “Nothing was decided at the meeting. Let’s keep it at that.”

Another banker with a mid-sized PSB said, “Discussions happened, but there really was no decision taken.”

Lenders to the cash-strapped airline include, among others, State Bank of India, HDFC Bank, ICICI Bank, Punjab National Bank, Axis Bank, Canara Bank, IDBI Bank and Standard Chartered Bank.

Jet’s statement came after reports surfaced on Wednesday morning that Abu Dhabi-based Etihad Airways, which currently holds a 24% stake in the airline, has offered an investment proposition in the cash-strapped carrier at Rs 150 per share along with an immediate infusion of $35 million with certain conditions.

With the offer standing at around 49% discount to Jet Airways closing price on Tuesday, the airline’s stock tumbled 7.95% on the BSE to close at Rs 271 apiece on Wednesday.

According to the report, Etihad CEO Tony Douglas has written to State Bank of India in regard to the restructuring plan of the airline. One of the prominent points mentioned by Douglas is that Jet promoter-chairman, Naresh Goyal should step down from the board and his stake be diluted to 22% from the current 51%. Etihad currently holds 24% in the airline and if the new plan materialises its stake will go up to 49%, the maximum a foreign carrier can hold in an Indian airline under the foreign direct investment norms for the aviation sector. The report also quoted Douglas stating that Jet may not be able to continue funding operations beyond the next week.

On the sidelines of an aviation conference in Mumbai, meanwhile civil aviation secretary, RN Choubey, said that the control of Jet Airways would need to remain in domestic hands. “Under no circumstances will we allow the substantial ownership and effective control to be busted,” he said, adding that even if Etihad’s stake is raised to 49%, the regulator will need to be satisfied that control was local.

Reportedly, one of the major stumbling blocks in Jet Airways receiving funding so far has been Goyal’s refusal to let go of his majority stake in the airline.

Etihad also wants some leeway from the Securities and Exchange Board of India (Sebi) with regard to preference pricing and open offer guidelines for making further investment in the beleaguered airline. According to a Reuters report, Jet has about $1.14 billion in net debt as at the end of September and a pile of dues to pilots, lessors and vendors.

The Reuters report also said that some lessors are even exploring the possibility of taking back aircraft from the airlines.

In its press release issued on Wednesday, Jet vehemently denied any discussions or disclosure on its part, with any media concerning the matter.

“In order to avoid any speculation and rumours, we hereby categorically state that in line with the decisions of the board of directors at their meeting held on 27 August, 2018, the company has been working on various cost cutting measures, debt reduction and funding options including infusion of capital, monetisation of assets including the company’s stake in its loyalty programme, in consultation with various key stakeholders,” Jet stated.

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